Multiple Product Break-Even Analysis (LO4)

Yuma 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 department 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 $45,000.

Standard Multiform Complex Bitingitrasts ecmw nmecmece rceelne $50 $125 $250 Average variable costs............ (30) (75) (150)

Average contribution margin ....... $20 $50 $100 Number of returns prepared........ 1,750 500 250 Required

a. Determine Yuma’s break-even dollar sales volume.

b. Determine Yuma’s margin of safety in sales dollars.

c. Prepare a profit-volume graph for Yuma’s Tax Service.