Cost-volume-profit analysis

Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labour; hence, there is no traceable fixed costs. Common fixed costs equal $17 400. Parkers 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 costs	$30	$42
Number of units	1 200	400

The tax rate is 28%.

Questions:

a. Calculate how many of each product would need to be sold in order to make an after-tax profit of $7 200.

b. Parker Pottery is considering upgrading its factory to improve the quality of its products. If the upgrade is successful, the projected sales of vases will be 1 400 and figurine sales will increase to 600 units. The upgrade will result in an increase in fixed costs to a total of $18,480. Now how many units of each of the products must it sell in order to break-even?