Question

work Exercise 18-22 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 $116 and of each doors $266. The variable cost of a window is $70.50 and of a door is $183.00 Fixed costs are $371000,(Enter your per unit" values in two decimal places.) (1) Determine the selling price per composite unit Quantity Selling Price per unit Windows Doors 11600 Tot per composite unit S 928.00 512.00 10000 Delmine the variable costs per composite unit Tot per composite und Windows 183.00 bution magn per composite SA < Prev 7 of 8 Next >

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Answer 1

ANS :-

1)

Calculation of selling price per composite unit.
	Quantity (A)	Selling Price per unit (B)	Total per composite unit (A*B)
Windows	8	$116.00	$928.00
Doors	2	$266.00	$532.00
Selling price per Composite unit			$1,460.00

2)

Calculation of variable costs per composite unit.
	Quantity (A)	Variable costs per unit (B)	Total per composite unit (A*B)
Windows	8	$70.50	$564.00
Doors	2	$183.00	$366.00
Variable cost per composite unit			$930.00
Contribution margin per composite unit
Sales		$1,460.00
Less: Variable costs		$930.00
Contribution margin		$530.00

3)

Calculation of break-even point in composite units.
Choose Numerator:	/	Choose Denominator:	=	Break Even Units
Total Fixed Costs	/	Contribution margin per unit	=	Break even units
$371,000	/	$530.00	=	700	Composite units

4)

Calculation of number of units of each product that will be sold at the break-even point.
	Quantity (A)	Number of composite units to break even. (B)	Unit sales at break-even point (A*B)
Windows	8	700	5600	Windows
Doors	2	700	1400	Doors
			7,000	Total