Question

Exercise 05-22 CVP analysis using composite units LO P4

Handy Home sells windows and doors in the ratio of 8:2 (windows:doors). The selling price of each window is $120 and of each door is $270. The variable cost of a window is $72.50 and of a door is $185.00. Fixed costs are $275,000. (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 $0.00 0.00 Contribution margin (3) Determine the break-even point in composite units. Choose Numerator: / Choose Denominator: = Break Even Units / = Break even units 0 (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 Total

Answer 1

selling price per composite unit
	quantity	selling price	Total per composite unit
windows	8	120	960
doors	2	270	540
			1500
variable cost per composite unit
	quantity	variable cost p.u	Total per composite unit
windows	8	72.5	580
doors	2	185	370
			950
Contribution margin per composite unit
sale per composite unit			1500
less: variable cost per composite			950
contribution margin			550
Breakeven point in composite units
Choose numerator	Choose denomirator
Total fixed cost	composite contribution margin	breakeven units
275000	550	500
unit of each product
	quantity	no of composite unit breakeven	unit sale at beakeven
windows	8	500	400
doors	2	500	100
	10		500