Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The sell
ID: 2567657 • Letter: H
Question
Handy Home sells windows and doors in the ratio of 7:3 (windows:doors). The selling price of each window is $109 and of each door is $259. The variable cost of a window is $67.00 and of a door is $179.50. Fixed costs are $772,125. (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. Quantity Variable 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 (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 DoorsExplanation / Answer
(1) Selling price per composite unit;
Quantity
Selling price per unit
Total per composite unit
Windows
7
$109
$763
Doors
3
$259
$777
Selling price per composite unit
$1540
(2) Variable cost per composite unit;
Quantity
Variable cost per unit
Total per composite unit
Windows
7
$67
$469
Doors
3
$179.50
$538.50
Variable cost per composite unit
$1007.50
Contribution margin per composite unit;
Formula is as follow;
(Sale price per conposite unit – Variable cost per composite unit)
Contribution margin per composite unit = ($1540 – $1007.50) = $532.50
(3) Break even point in per composite units;
Formula is as follow;
(Fixed costs Contribution / margin per composite unit)
Break even point in per composite units = ($772125 / $532.50) = 1450 units
(4) 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
7
1450
10150
Doors
3
1450
4350
Quantity
Selling price per unit
Total per composite unit
Windows
7
$109
$763
Doors
3
$259
$777
Selling price per composite unit
$1540
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