Question
Multiple Product Break-Even Analysis Joe's Tax Service provides professional accounting and tax services. All tax return services are classified into one of three categories: standard,
Multiple Product Break-Even Analysis Joe's Tax Service provides professional accounting and tax services. All tax return services 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 $70,000.
Standard | Multiform | Complex | |||
---|---|---|---|---|---|
Billing rate | $70 | $145 | $270 | ||
Average variable costs | (30) | (75) | (150) | ||
Average contribution margin | $40 | $70 | $120 | ||
Number of returns prepared | 1,750 | 500 | 250 |
Required (a.) Determine Joe's break-even dollar sales volume.
- Enter billing rates and contribution margins using all decimals, when needed.
- Round contribution margin ratio to three decimal places.
- Round break-even sales volume to the nearest dollar.
Product |
Weighted Billing Rate | 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. Hint: Use weighted average billing rate.
Round answer to the nearest whole number. $Answer
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