Question

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 $36,000. parker's accountant has begun to assess the profitability of the two lines and has gathered the following data for last year: line item description 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. line item description answer break-even vases fill in the blank 1 units break-even figurines fill in the blank 2 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? line item description answer break-even vases fill in the blank 3 units break-even figurines fill in the blank 4 units feedback area feedback

Answer 1

The break-even threshold is reached when overall costs and total revenues are equal, leaving your small firm with no net benefit or loss. In other words, you've achieved the point in production where the revenue from a product equals the cost of manufacture.

What is BEP?

• In economics, business, and particularly cost accounting, the break-even point is the point at which total cost and total income are equal, or "even." Although opportunity costs have been paid and capital has received the risk-adjusted, projected return, there is no net loss or gain, and one has "broken even."
• The break-even threshold is reached when overall costs and total revenues are equal, leaving your small firm with no net benefit or loss. In other words, you've achieved the point in production where the revenue from a product equals the cost of manufacture.

The weighted average contribution margin (WACM) per unit is 15.

The break-even point (BEP) for vases is 870.

BEP for figurine is 290

Calculation:

Sales Mix= 1,200:400

=3:1

WACM per unit= (3/4)(40-30)+1/4(70-42)

=7.5+7

=8+7

=15

Overall BEPs (units) = total fixed costs/WACM unit

=17,400/15

=1,160

BEP in units for vases = 1,160 * 3/4

= 870

 BEP in units for figurine = 1,160*1/4

=290

Hence,

The WACM per unit is 15.

The total BEP is 1,160.

The BEP for vases is 870.

The BEP for figurines is 290.

To learn more about BEP refer to:

https://brainly.com/question/21137380

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