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Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions
Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions (Itemized). Price and variable costs for the two services are listed below. Sales price (per return) Variable costs (per return) Standard $ 60.00 20.00 Itemized $ 270.00 50.00 The annual fixed costs at Grixdale are $280,000. Based on experience, the owner estimates that Standard Deduction returns represent 25 percent of the the firm's business. Required: How many Standard Deduction and Itemized Deduction returns must be filed annually to break even? Standard Deduction returns Itemized Deduction returns Break-Even Sales in Units
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To calculate the breakeven point we need to determine the total contribution margin per return for each service The contribution margin is the difference between the sales price per return and the var...Get Instant Access to Expert-Tailored Solutions
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