Question
In: Accounting
Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service operates January 2 through...
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 $30 $60 $110
Number of returns prepared 1,750 500 250
Required (a.) Determine Joe's break-even dollar sales volume.
- Round contribution margin to three decimal places.
- Round break-even sales volume to the nearest dollar.
Solutions
Expert Solution
| Standard | Multiform | Complex | Total | |
| Billing Rate | $ 60.00 | $ 135.00 | $ 260.00 | |
| Ratio | 7 | 2 | 1 | |
| Weighted Selling Price | $ 42.00 | $ 27.00 | $ 26.00 | $ 95.00 |
| Average contribution margin | $ 30.00 | $ 60.00 | $ 110.00 | |
| Ratio | 7 | 2 | 1 | |
| Weighted Contribution Margin | $ 21.00 | $ 12.00 | $ 11.00 | $ 44.00 |
| Contribution margin ratio: | 0.463157895 | |||
| Fixed Cost | $ 60,000.00 | |||
| Break-even sales volume: | $129,545.45 |
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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
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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
$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...
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