handy home sells windows (40% of sales) and doors (60% of sales). the selling price of each window is $360 and of each door is $820. the variable cost of each window is $205 and of each door is $510. fixed costs are $1,426,000.

Respuesta :

  1. Selling price per composite unit: $2,600.
  2. Variable cost per composite unit: $1,700.
  3. Break-even point in composite units: 1,000 units.
  4. Break-even point in total 10,000 units.

What is a break-even point?

  • When total cost and total revenue are equal, a small business is said to have reached its break-even point and is in a neutral position. In other words, you've arrived at the point in your manufacturing cycle where the revenue from a product is equal to its production expenses.
  • Use the following calculation to determine the break-even point in units: Break-Even Point (in Units) = Fixed Costs (Sales Price Per Unit - Variable Cost Per Unit) or, when expressed in Sales Dollars, as follows: Break-Even Point (in sales dollars) = Contribution Margin – Fixed Costs.
  • When a company's revenues and expenses were equal for a certain accounting period, this circumstance is known as the break-even point (BEP) in accounting. In other words, the corporation "broke even," meaning there were no net earnings or losses.

The complete question is:

Handy Home sells windows and doors in the ratio of 8:2 (windows: doors). The selling price of each window is $200 and of each door is $500. The variable cost of a window is $125 and of a door is $350. Fixed costs are $900,000. Use this information to determine the (1) selling price per composite unit, (2) variable costs per composite unit, (3) break-even point in composite units, and (4) number of units of each product that will be sold at the break-even point.

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