Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
image text in transcribed
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 $70 Variable costs $30 $42 Number of units 1 200 400 The tax rate is 28%. $40 a. Calculate the weighted average contribution margin. (3 marks) 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? (5 marks) c. Calculate how many of each product would need to be sold in order to make an after-tax profit of $7 200. (5 marks) 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? (4 marks) 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 $70 Variable costs $30 $42 Number of units 1 200 400 The tax rate is 28%. $40 a. Calculate the weighted average contribution margin. (3 marks) 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? (5 marks) c. Calculate how many of each product would need to be sold in order to make an after-tax profit of $7 200. (5 marks) 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? (4 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Text Only

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel

5th Edition

0006575404, 978-0006575405

More Books

Students also viewed these Accounting questions