Question
In: Accounting
Multiple-Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each...
Multiple-Product Breakeven
Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals $38,400. 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 cost | 30 | 42 | |
| Contribution margin | $10 | $28 | |
| Number of units | 1,000 | 500 |
Required:
If required, round your final answers to nearest whole value.
1. Compute the number of vases and the number of figurines that must be sold for the company to break even.
| Break-even vases | units |
| Break-even figurines | units |
2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5,280 per year to total fixed cost. If the upgrade is successful, the projected sales of vases will be 2,000, and figurine sales will increase to 1,000 units. What is the new break-even point in units for each of the products?
| Break-even vases | units |
| Break-even figurines | units |
Solutions
Expert Solution
1.
| Total sales units = 1000 + 500 | 1500 |
| % unit sales of vases = 1000/1500 | 66.67% |
| % unit sales of figurines = 500/1500 | 33.33% |
| Weighted average selling price = 40*66.67% + 70*33.33% | 50 |
| Weighted average variable cost = 30*66.67% + 42*33.33% | 34 |
| Breakeven point = Total fixed cost / ( Weighted average selling price - Weighted average variable cost ) = 38400/(50-34) | 2400 units |
| Breakeven vases ( 2400 * 66.67% ) | 1600 units |
| Breakeven figurines ( 2400 * 33.33% ) | 800 units |
2. New fixed costs = 38400 + 5280 = 43680
| Total sales units = 2000 + 1000 | 3000 |
| % unit sales of vases = 2000/3000 | 66.67% |
| % unit sales of figurines = 1000/3000 | 33.33% |
| Weighted average selling price = 40*66.67% + 70*33.33% | 50 |
| Weighted average variable cost = 30*66.67% + 42*33.33% | 34 |
| Breakeven point = Total fixed cost / ( Weighted average selling price - Weighted average variable cost ) = 43680/(50-34) | 2730 units |
| Breakeven vases ( 2730 * 66.67% ) | 1820 units |
| Breakeven figurines ( 2730 * 33.33% ) | 910 units |
ekkarill92 answered 1 year agoRelated Solutions
Multiple-Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each...
Multiple-Product Breakeven
Parker Pottery produces a line of vases and a line of ceramic
figurines. Each line uses the same equipment and labor; hence,
there are no traceable fixed costs. Common fixed cost equals
$40,000. 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 cost
30
42
Contribution margin
$10
$28
Number of units
1,000
500
Required:
If required, round your final...
Multiple-Product Breakeven Parker Pottery produces a line of vases and a line of ceramic figurines. Each...
Multiple-Product Breakeven
Parker Pottery produces a line of vases and a line of ceramic
figurines. Each line uses the same equipment and labor; hence,
there are no traceable fixed costs. Common fixed cost equals
$30,000. 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 cost
30
42
Contribution margin
$10
$28
Number of units
1,000
500
Required:
1. Compute the number of...
Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses...
Parker Pottery produces a line of vases and a line of ceramic
figurines. Each line uses the same equipment and labor; hence,
there are no traceable fixed costs. Common fixed cost equals
$30,000. 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 cost
30
42
Contribution margin
$10
$28
Number of units
1,000
500
Required:
1. Compute the number of vases and...
C&A Pottery makes ceramic vases using a process that involves forming, drying, firing, and glazing. The...
C&A Pottery makes ceramic vases using a process that
involves forming, drying, firing, and glazing. The 5 workers each
takes on average 50 minutes to form a vase. The vases will then be
loaded into an oven to dry. The oven can hold up to 100 pieces and
it takes 5 minutes to load each vase. Once all the vases are loaded
into the oven, it takes 24 hours to dry each load. The dried vases
are then placed in...
The table below shows the costs of a firm that produces handmade pottery vases in a...
The table below shows the costs of a firm that produces handmade
pottery vases in a competitive industry.
Output
AVC
MC
1
3
3
2
2.50
2
3
2.17
1.5
4
1.93
1.2
5
1.74
1
6
1.67
1.3
7
1.71
2
8
2
4
9
2.44
6
10
3
8
The market price for a handmade vase is $4.50. To maximize its
profit, this firm should produce vases.
Gigabody, Inc., a nutritional supplement manufacturer, produces five lines of protein supplements. Each product line is...
Gigabody, Inc., a nutritional supplement manufacturer,
produces five lines of protein supplements. Each product line is
managed separately by a senior-level product engineer who is
evaluated, in part, based on his or her ability to keep costs low.
The five product lines are produced in a joint production process.
After splitting off from the joint production process, all five
lines are processed further before resale.
Traditionally, joint product costs have been allocated to the
five product lines using the physical...
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 9,450,000
Total variable cost
5,575,500
Contribution margin
$ 3,874,500
Total fixed cost
2,625,189
Operating income
$ 1,249,311
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest...
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units, Contribution Margin Ratio, Multiple-Product
Breakeven, Margin of Safety, Degree of Operating Leverage
Jellico Inc.'s projected operating income (based on sales of
450,000 units) for the coming year is as follows:
Total
Sales
$ 13,050,000
Total variable cost
8,482,500
Contribution margin
$ 4,567,500
Total fixed cost
2,472,540
Operating income
$ 2,094,960
Required:
1(a). Compute variable cost per unit. Enter
your answer to the nearest cent.
$per unit
1(b). Compute contribution margin per unit.
Enter your answer to the nearest...
Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...
Break-Even Units,
Contribution Margin Ratio, Multiple-Product Breakeven, Margin of
Safety, Degree of Operating Leverage
Jellico Inc.'s
projected operating income (based on sales of 450,000 units) for
the coming year is as follows:
Total
Sales
$9,000,000
Total variable cost
$6,300,000
Contribution
margin
$2,700,000
Total fixed cost
$1,824,000
Operating income
$ 876,000
Required:
1(a).
Compute variable cost per unit. Enter your answer to the nearest
cent.
______ per unit
1(b).
Compute contribution margin per unit. Enter your answer to the
nearest cent....
A multiple line specialty merchandiser retailer is MOST LIKELY to carry product lines that are considered:...
A multiple line specialty merchandiser retailer is MOST LIKELY
to carry product lines that are considered:
narrow width and extended depth
broad width and shallow depth
broad width and extended depth
narrow width and shallow depth
When determining where to geographically locate a physical
store, a retailer must conduct analysis that considers the tradeoff
between:
The cost of filling the store with inventory versus the attitude
of competitive store owners.
The cost of acquiring the retail site versus the profit...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- From 1965 to present, feminism sought to critique mainstream American society in order to challenge proscribed...
- For 20Y2, Tri-Comic Company initiated a sales promotion campaign that included the expenditure of an additional...
- Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The...
- TOWS matrix of WOW MOMO
- Write an anecdotal lead with a person focus from the following information; include a nut graph....
- Step 1 Picture yourself as a Senior Product Manager in your favorite industry. This could be...
- Gauss Jordan elimination using python for a 2d list (3x3) without using any library. Thanks
ADVERTISEMENT