Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $390 and of each door is $880. The variable cost of each window is $220 and of each door is $540. Fixed costs are $1,203,600. (1) Compute the weighted-average contribution margin. Sales mix 80% 20% Windows Doors Weighted average contribution margin (2) Compute the break-even point in units using the weighted-average contribution margin. Denominator: Weighted-average contribution margin per unit Numerator: Total fixed costs S Contribution margin 1,203,600 1 Windows Doors Total (3) Compute the number of units of each product that will be sold at the break-even point. Sales mix Number of units to break even Total per unit Break Even Units Break Even Units Unit sales at break-even point
Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $390 and of each door is $880. The variable cost of each window is $220 and of each door is $540. Fixed costs are $1,203,600. (1) Compute the weighted-average contribution margin. Sales mix 80% 20% Windows Doors Weighted average contribution margin (2) Compute the break-even point in units using the weighted-average contribution margin. Denominator: Weighted-average contribution margin per unit Numerator: Total fixed costs S Contribution margin 1,203,600 1 Windows Doors Total (3) Compute the number of units of each product that will be sold at the break-even point. Sales mix Number of units to break even Total per unit Break Even Units Break Even Units Unit sales at break-even point
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Handy Home sells windows (80% of sales) and doors (20% of sales). The selling price of each window is $390 and of each door is
$880. The variable cost of each window is $220 and of each door is $540. Fixed costs are $1,203,600.
(1) Compute the weighted-average contribution margin.
100Sales mix
80%
20%
Windows
Doors
Numerator:
(2) Compute the break-even point in units using the weighted-average contribution margin.
Denominator:
Weighted-average contribution margin per unit
Total fixed costs
$
Contribution margin
7
1,203,600 1
Windows
Doors
Total
Weighted-average contribution margin
(3) Compute the number of units of each product that will be sold at the break-even point.
Sales mix
Number of units to break even
Total per unit
Break Even Units
Break Even Units
0
Se
Unit sales at
break-even point
+
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