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

Handy Home sells windows and doors in the ratio of 8:2 (windows:doors). The selling price of each window is $118 and of each door is $268. The variable cost of a window is $71.50 and of a door is $184.00. Fixed costs are $324,000. (Enter your "per unit" values in two decimal places.)

1) Determine the selling price per composite unit.QuantitySelling Price per unitTotal per composite unitWindowsDoors(2) Determine the variable costs per composite unit.QuantityVariable costs per unitTotal per composite unitWindowsDoorsContribution margin per composite unit$0.000.00Contribution margin(3) Determine the break-even point in composite units.Choose Numerator:/Choose Denominator:=Break Even Units/=Break even units0(4) Determine the number of units of each product that will be sold at the break-even point.QuantityNumber of composite units to break even.Unit sales at break-even pointWindowsDoors

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Answer #1

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

The selling price of each window is $118 and of each door is $268.

The variable cost of a window is $71.50 and of a door is $184.00.

Fixed costs are $324,000

1.

Selling price per composite unit = Selling price of window x Proportion of window + Selling price of door x Proportion of door

= 118 x 0.8 + 268 x 0.2

= $94.4 + 53.6

= $148

2.

Variable cost per composite unit = Variable cost of window x Proportion of window + Variable cost of door x Proportion of door

= 71.50 x 0.8 + 184 x 0.2

= $57.2 + 36.8

= $94

3.

Contribution margin per composite unit = Selling price per composite unit - Variable cost per composite unit

= 148 - 94

= $54

Break even point (in units) = Fixed cost/Contribution margin per composite unit

= 324,000/54

= 6,000 units

4.

Break even quantity of window = 6,000 x 0.8

= 4,800 units

Break even quantity of door = 6,000 x 0.2

= 1,200 units

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