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 $50,000.

			Standard	Multiform	Complex
Billing rate			$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 Joe's break-even dollar sales volume.

Product	Weighted Selling Price	Weighted Contribution Margin
Standard	$Answer	$Answer
Multiform	Answer	Answer
Complex	Answer	Answer
Total	$ Answer	$ Answer
Contribution margin ratio:		Answer
Break-even sales volume:		$Answer

(b.) Determine Joe's margin of safety in sales dollars. $Answer

Contribution Margin Concepts The following information is taken from the 2017 records of Hendrix's Guitar Center.

		Fixed	Variable	Total
Sales				$750,000
Costs
Goods sold			$337,500
Labor		$160,000	60,000
Supplies		2,000	5,000
Utilities		12,000	13,000
Rent		24,000	0
Advertising		6,000	24,500
Miscellaneous		6,000	10,000
Total costs		$210,000	$450,000	(660,000)
Net income				$ 90,000

Required

(a.) Determine the annual break-even dollar sales volume.

Contribution margin ratio: Answer Annual break-even dollar sales volumes: $Answer

(b.) Determine the current margin of safety in dollars. $Answer

(c.) Prepare a cost-volume-profit graph for the guitar shop. Label both axes in dollars with maximum values of $1,000,000. Draw a vertical line on the graph for the current ($750,000) sales level, and label total variable costs, total fixed costs, and total profits at $75,000 sales.

(d.) What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $35,000? $Answer

Contribution Income Statement and Cost-Volume-Profit Graph Kopi Company produces dog cages that are sold for $40 per unit. The company produced and sold 6,000 dog cages during July 2017. There were no beginning or ending inventories. Variable and fixed costs follow.

Variable Costs per Unit				Fixed Costs per Month
Manufacturing:				Manufacturing overhead			$40,000
Direct materials		$10		Selling and administrative			20,000
Direct labor		2		Total			$60,000
Manufacturing overhead		5	$17
Selling and administrative			5
Total			$22

Required Prepare a contribution income statement for July.

Do not use any negative signs with your answers.

Kopi Company
Contribution Income Statement
For the Month of July 2017
Sales		$ Answer
Less variable costs
Direct materials	$ Answer
Direct labor	Answer
Manufacturing overhead	Answer
Selling and administrative	Answer	Answer
Contribution margin		Answer
Less fixed cost:
Manufacturing overhead	Answer
Selling and administrative	Answer	Answer
Profit		$ Answer