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Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs Comm equals $38,400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Price Variable cost Contribution margin Number of units Required: Vases $40 30 $10 1,000 Figurines $70 42 $28 500

Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs Comm equals $38,400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Price Variable cost Contribution margin Number of units Required: Vases $40 30 $10 1,000 Figurines $70 42 $28 500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Multiple Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed co- equals $38,400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Price Variable cost Vases $40 30 $10 Break even vases Break even figurines Contribution margin Number of units Required: If required, round your final answers to nearest whole value. 1. Compute the number of vases and the number of figurines that must be sold for the company to break even. Break even vases 1,600 Break even figurines units 2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5,280 per year to total fixed cost. If the upgrade is successful, the projected sales of vases will be 2,000, and figurine sales will increase to 1,000 units. What is the new break-even point in units for each of the products? X units 1,000 units Figurines $70 x units 42 $28 500
Transcribed Image Text:Multiple Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed co- equals $38,400. Parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: Price Variable cost Vases $40 30 $10 Break even vases Break even figurines Contribution margin Number of units Required: If required, round your final answers to nearest whole value. 1. Compute the number of vases and the number of figurines that must be sold for the company to break even. Break even vases 1,600 Break even figurines units 2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5,280 per year to total fixed cost. If the upgrade is successful, the projected sales of vases will be 2,000, and figurine sales will increase to 1,000 units. What is the new break-even point in units for each of the products? X units 1,000 units Figurines $70 x units 42 $28 500
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