Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The sell

Question

Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $115 and of each door is $265. The variable cost of a window is $70.00 and of a door is $182.50. Fixed costs are $421,875. (Enter your "per unit" values in two decimal places.) (1) Determine the selling price per composite unit. Quantity Selling Price per unit Total per composite unit Windows Doors (2) Determine the variable costs per composite unit. QuantityV ariable costs per unit Total per composite unit Windows Doors Contribution margin per composite unit Contribution margin (3) Determine the break-even point in composite units Choose Numerator Choose Denominator: Break Even Units Break even units

Explanation / Answer

1) Determine the selling price per composite unit Quantity Selling price per unit total per composite unit Windows 7 115 805 Doors 3 265 795 1600 2) Determine the Variable cost per composite unit Quantity Selling price per unit total per composite unit Windows 7 70 490 Doors 3 182.5 547.5 1037.5 Contribution margin per composite Sales 1,600 less Variable costs 1037.5 Contribution margin 562.50 3) Determine the break even point in composite units Choose Numerator / Choose Denominator = Break even point Total fixed cost / Contribution margin per unit = Break even point 421,875 / 562.50 = 750 composite units 4) Determine the number of units of each product that will be sold at the breakeven point Number of composite units to unit sales at break even point Quantity Break even Windows 7 750 5250 Doors 3 750 2250 total 7500 total

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