Hello, please help with my accounting homework! Scenario: Parker Pottery produces a line of vases...
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Accounting
Hello, please help with my accounting homework!
Scenario:
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?
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?
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