Cost-volume-profit analysis

Required

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?

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

d. 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?

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. 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 costs $30 $42 Number of units 1 200 400 The tax rate is 28%