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
Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...
Multiple Product Break-Even Analysis
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 $65,000.
Standard
Multiform
Complex
Billing rate
$65
$140
$265
Average variable costs
(30)
(75)
(150)
Average contribution margin...
Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...
Multiple Product Break-Even Analysis
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 $55,000.
Standard
Multiform
Complex
Billing rate
$55
$130
$255
Average variable costs
(30)
(75)
(150)
Average contribution margin...
Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...
Multiple Product Break-Even Analysis
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
$135
$260
Average variable costs
(30)
(75)
(150)
Average contribution margin...
Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...
Multiple Product Break-Even Analysis
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
$135
$260
Average variable costs
(30)
(75)
(150)
Average contribution margin...
Explain break-even analysis, its purpose, and whether break-even analysis can be used in manufacturing and/or service...
Explain break-even analysis, its purpose, and whether break-even
analysis can be used in manufacturing and/or service industry.
The CPA-auditor is required to be INDEPENDENT (even though the accounting firm is paid by the...
The CPA-auditor is required to be INDEPENDENT (even though the
accounting firm is paid by the corporation). In contrast, the
CPA-tax accountant (or attorney) is an ADVOCATE of the client (not
a spokesperson for the IRS). Please discuss the legal, ethical, and
pragmatic distinctions between these two conflicting positions.
Support your comments using Circular 230 and the AICPA Code of
Professional Conduct.
Calculate the accounting break-even, the cash break-even and the financial break-even points for this project....
Calculate the accounting break-even,
the cash break-even and the financial break-even
points
for this project. The company’s required return is 9% and the
project will run
for 5
years. Round your answer up to the next highest integer. Ignore any
tax effects
in
calculating the cash break-even.
Unit
Variable
Annual
Fixed
Equipment
Unit
Price
Cost
Costs
Cost
$
3,020
$
2,275
$
9,000,000
$ 3,100.000
describe applications of break-even analysis in practice. provide limitations of break-even analysis.
describe applications of break-even analysis in practice.
provide limitations of break-even analysis.
Break-even analysis for a service company Sprint Nextel is one of the largest digital wireless service...
Break-even analysis for a service company
Sprint Nextel is one of the largest digital wireless service
providers in the United States. In a recent year, it had
approximately 32.5 million direct subscribers (accounts) that
generated revenue of $35,345 million. Costs and expenses for the
year were as follows (in millions):
Cost of revenue
$20,841
Selling, general, and administrative expenses
9,765
Depreciation
2,239
Assume that 70% of the cost of revenue and 30% of the selling,
general, and administrative expenses are...
Break-even analysis for a service company Rotelco is one of the largest digital wireless service providers...
Break-even analysis for a service company Rotelco is one of the
largest digital wireless service providers in the United States. In
a recent year, it had approximately 100 direct subscribers
(accounts) that generated revenue of $36,300. Costs and expenses
for the year were as follows: Cost of revenue $16,300 Selling,
general, and administrative expenses 11,600 Depreciation 4,000
Assume that 60% of the cost of revenue and 30% of the selling,
general, and administrative expenses are variable to the number of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- In the article from Forbes notes that the goal of a leader is not to clone...
- Many people keep time using a 24 hour clock (11 is 11am and 23 is 11pm,...
- UNIX ONLY -- DIFFICULT LAB ASSIGNMENT This is an extremely difficult subject for me. Could you...
- Do you know why your credit card can be refused even though you are profitable?
- The Following Java expression: S/10 * 10 + 10 – S = C Show that this...
- Year Cash Flow 0 −$9,700 1 5,800 2 2,500 3 3,400 &nb
- In a two – story building, an exterior column is to be designed for a service...
ADVERTISEMENT