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ser-zykov [4K]
3 years ago
8

Handy Home sells windows and doors in the ratio of 8:2 (windows:doors). The selling price of each window is $106 and of each doo

r is $256. The variable cost of a window is $65.50 and of a door is $178.00. Fixed costs are $624,000.
Required:
a. Determine the selling price per composite unit.
b. Determine the variable costs per composite unit.
c. Determine the break-even point in composite units.
d. Determine the number of units of each product that will be sold at the break-even point.
Business
1 answer:
AlexFokin [52]3 years ago
7 0

Answer:

Results are below.

Explanation:

<u>First, we need to calculate the sales proportion:</u>

Windows= 8/10= 0.8

Doors= 2/10= 0.2

<u>Now, the selling and unitary variable cost per composite unit:</u>

Selling price= 106*0.8 + 256*0.2= $136

Unitary varaible price= 65.5*0.8 + 178*0.2= $88

<u>The break-even point:</u>

Break-even point (units)= Total fixed costs / Weighted average contribution margin

Break-even point (units)= 624,000 / (136 - 88)

Break-even point (units)= 13,000

<u>Finally, the number of units for each product:</u>

Windows= 13,000*0.8= 10,400

Doors= 13,000*0.2= 2,600

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