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 cost 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: Vases Figurines Price $40 $70 Variable cost 30 42 Contribution margin $10 $28 Number of units 1,000 500 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 fill in the blank 1 units Break-even figurines fill in the blank 2 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? Break-even vases fill in the blank 3 units Break-even figurines fill in the blank 4 units
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 cost 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: Vases Figurines Price $40 $70 Variable cost 30 42 Contribution margin $10 $28 Number of units 1,000 500 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 fill in the blank 1 units Break-even figurines fill in the blank 2 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? Break-even vases fill in the blank 3 units Break-even figurines fill in the blank 4 units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
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 cost 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:
| Vases | Figurines | ||
| Price | $40 | $70 | |
| Variable cost | 30 | 42 | |
| Contribution margin | $10 | $28 | |
| Number of units | 1,000 | 500 |
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 | fill in the blank 1 units |
| Break-even figurines | fill in the blank 2 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?
| Break-even vases | fill in the blank 3 units |
| Break-even figurines | fill in the blank 4 units |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education