Handy Home sells windows and doors in the ratio of 8:2 (windows.doors). The sell

Question

Handy Home sells windows and doors in the ratio of 8:2 (windows.doors). The selling price of each window is $102 and of each door is $252. The variable cost of a window is $63.50 and of a door is $176.00. Fixed costs are $506,000. (Enter your "per unit" values in two decimal places.) Answer is not complete (1) Determine the selling price per composite unit. Quantity Selling Price per unit Total per composite unit Windows 102.00 $ 714.00 1,764.00 $2,478.00 Doors 7 252.00 . (2) Determine the variable costs per composite unit. Quantity Variable costs per unit Total per composite unit Windows 63.50 Doors 7 176.00 1,232.00 Contribution margin per composite unit 2,478.00 0.00 528.00 Sales Variable costs Contribution margin Less: V (3) Determine the break-even point in composite units Choose Numerator: Choose Denominator: Break Even Units Contribution margin per unit Total fixed costs Break even units 506,000 959Composite 528.00 X units (4) Determine the number of units of each product that will be sold at the break-even point. Quantity Number of composite units to break even Unit sales at break-even point Windows Doors 7

Explanation / Answer

SOLUTION

(1)

(2)

Contribution margin per composite unit-

(3) Breakeven point in composite units =

= Fixed costs / Contribution margin per unit

= $506,000 / 460 = 1,100 composite units

(4)

Quantity (A) Selling price per unit ($) (B) Total per composite unit ($) (A*B) Windows 8 102 816 Door 2 252 504 1,320

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