Question
In: Finance
Multiple Product Break-Even Analysis TPG Tax & Accounting is a full-service CPA firm located in Apache...
Multiple Product Break-Even Analysis
TPG Tax & Accounting is a full-service CPA firm located in
Apache Junction, Arizona. Assume that tax return services are
classified into one of three categories: standard, complex, and
full-service (includes end-of-year bookkeeping with tax return
preparation). Assume that TPG’s fixed costs (rent, utilities,
wages, and so forth) totaled $180,000 last year. Additional
information from the prior year follows.
| Standard | Complex | Full-Service | |||
|---|---|---|---|---|---|
| Billing rate | $125 | $250 | $150 | ||
| Average variable costs | (45) | (65) | (50) | ||
| Average contribution margin | $80 | $185 | $100 | ||
| Number of returns prepared | 1,000 | 200 | 800 |
Required
(a.) Using sales dollar analysis, determine TPG’s break-even dollar
sales volume
- Enter billing rates and contribution margins using all decimals, when needed.
- Round contribution margin ratio to three decimal places.
- Round break-even sales volume to the nearest dollar.
|
Product |
Weighted Billing Rate |
Weighted Contribution Margin |
|---|---|---|
| Standard | Answer | Answer |
| Complex | Answer | Answer |
| Full-Service | Answer | Answer |
| Total | Answer | Answer |
| Contribution margin ratio: | Answer | |
| Break-even sales volume: | Answer |
(b.) Determine TPG's margin of safety in sales dollars.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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Joe's Tax Service prepares tax returns for low-to middle-income
taxpayers. Its service operates January 2 through April 15 at a
counter in a local grocery store. All jobs are classified into one
of three categories: standard, multiform, and complex. Following is
information for last year. Also, last year, the fixed cost of rent,
utilities, and so forth were $60,000.
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Multiform
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Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...
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Joe's Tax Service prepares tax returns for low-to middle-income
taxpayers. Its service operates January 2 through April 15 at a
counter in a local grocery store. All jobs are classified into one
of three categories: standard, multiform, and complex. Following is
information for last year. Also, last year, the fixed cost of rent,
utilities, and so forth were $60,000.
Standard
Multiform
Complex
Billing rate
$60
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$260
Average variable costs
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Average contribution margin...
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