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.

StandardMultiformComplexBilling rate$50$125$250Average variable costs(30)(75)(150)Average contribution margin$20$50$100Number of returns prepared1,750500250

Required

(a.) Determine Joe's break-even dollar sales volume.

Product

Weighted

Selling Price

Weighted

Contribution

Margin

StandardAnswer

Answer

MultiformAnswer

Answer

ComplexAnswer

Answer

TotalAnswer

Answer

Contribution margin ratio:Answer

Break-even sales volume:Answer

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

$Answer