Question

Ch 05 Ex 5-22 Saved Exercise 05-22 CVP analysis using composite units LO P4 points Handy Home sells windows and doors in the ratio of 7:3 (windows doors). The selling price of each window is $103 and of each door is $253. The variable cost of a window is $64.00 and of a door is $176.50. Fixed costs are $577,875. (Enter your "per unlt" values in two decimal places.) Skipped (1) Determine the selling price per composite unit. Quantity Windows Selling Price per unit Total per composite unit eBook 103.00 253.00 Doors 759.00 CON Hint Variable costs per unit Total per composite unit (2) Determine the variable costs per composite unit. Quantity Windows $ Doors Ask 64.00 176.50 Print Contribution margin per composite unit 0.00 0.00 References Contribution margin (3) Determine the break-even point in composite units. Choose Numerator: Choose Denominator: - Break Even Units Brea Break even units Unit sales at break-even point (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. Windows Doors Total

Answer 1

Solution:

Determine the selling price per composite unit
	Quantity	Selling Price per unit		Total per composite unit
Windows	7	$103		$721
Doors	3	$253		$759
	Total			$1,480
Determine the Variable cost per composite unit
	Quantity	Variable cost per unit		Total per composite unit
Windows	7	$64.00		$448
Doors	3	$176.50		$530
	Total			$978
Contribution Margin per composite unit
Sale per composite unit	$1,480
Less: Variable cost per composite unit	$978
Contribution Margin	$503
Break even point in Composite units
Choose numerator	/	Choose Denominator	=	Breakeven Units
Total Fixed cost	/	Composite Contribution Margin per unit	=	Breakeven Units
$5,77,875	/	$503	=	1150	Units
Determine the number of units of each product that will be sold at the break even point
	Quantity	No.of composite units to break even		Unit sales at break even (In ratio 8:2)
Windows	7	1150		8050
Doors	3	1150		3450
Total				11500