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 the weighted average contribution margin.

b. Compute the number of vases and the number of figurines that must be sold for the company to break-even. How much revenue would be received for each product?