Question

helpful hardware sells windows (80% of sales) and doors (20% of sales). the selling price of each window is $560 and of each door is $1,160. the variable cost of each window is $370 and of each door is $860. fixed costs are $1,704,480. the break-even point in units using the weighted-average contribution margin is:

Answer 1

To find the break-even point in units using the weighted-average contribution margin, calculate the weighted-average contribution margin per unit by multiplying the contribution margin of each product by its sales percentage and then summing the results. Divide the fixed costs by the weighted-average contribution margin per unit to find the break-even point in units.

Step-by-step explanation:

To find the break-even point in units using the weighted-average contribution margin, we need to calculate the weighted-average contribution margin per unit. The weighted-average contribution margin is calculated by multiplying the contribution margin of each product by its sales percentage and then summing the results. In this case, the contribution margin of a window is $190 ($560 selling price - $370 variable cost) and the contribution margin of a door is $300 ($1,160 selling price - $860 variable cost). The sales percentage of windows is 80% and the sales percentage of doors is 20%. So the weighted-average contribution margin per unit is:

(0.8 * $190) + (0.2 * $300) = $152

The break-even point in units is calculated by dividing the fixed costs by the weighted-average contribution margin per unit:

$1,704,480 / $152 = 11,200 units