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

$25 $55 $105 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.

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.

Round answer to the nearest dollar.