Selina McDowell sells various pottery items at regional craft fairs. Her fixed expenses (de¬

preciation on the kiln, utilities, tools, portable selling booth) are $5,000 per year. The aver¬

age price for a piece of pottery is $5.50, and the average variable cost (e.g., clay, paints, glazes, price tags) is $3.50 per item.

Required:

1. How many pieces of pottery must Selina sell to just cover her expenses?

2. If Selina wants to earn $7,000 profit, how many pieces of pottery must she sell? Prepare a variable-costing income statement to verify your answer.