Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax...

Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics:

	Individuals		Partnerships		Corporations
Price charged per tax return	$	250	$	1,000	$	2,200
Variable cost per tax return (including wage paid to tax preparer)	$	200	$	900	$	2,010
Expected tax returns prepared per year		51,000		17,000		17,000

The total fixed costs per year for the company are $853,600.

Required:

a. What is the anticipated level of profits for the expected sales volumes?

b. Assuming that the product mix is the same at the break-even point, compute the break-even point.

c. Suppose the product sales mix changes so that, for every ten tax returns prepared, six are for individuals, one is for a partnership, and three are for corporations. Now what is the break-even volume for Sell Block?

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Expert Solution

ekkarill92 answered 1 year ago

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