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Multiple Product Break-Even Analysis TPG Tax & Accounting is a full-service CPA firm located in Apache Junction, Arizona. Assume that tax return services are classified

Multiple Product Break-Even Analysis TPG Tax & Accounting is a full-service CPA firm located in Apache Junction, Arizona. Assume that tax return services are classified into one of three categories: standard, complex, and full-service (includes end-of-year bookkeeping with tax return preparation). Assume that TPGs fixed costs (rent, utilities, wages, and so forth) totaled $180,000 last year. Additional information from the prior year follows.

Standard

Complex

Full-Service

Billing rate

$125

$250

$150

Average variable costs

(45)

(65)

(50)

Average contribution margin

$80

$185

$100

Number of returns prepared

1,000

200

800

Required (a.) Using sales dollar analysis, determine TPGs 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

Complex

Answer

Answer

Full-Service

Answer

Answer

Total

Answer

Answer

Contribution margin ratio:

Answer

Break-even sales volume:

Answer

(b.) Determine TPG's margin of safety in sales dollars. Hint: Use weighted average billing rate.

$Answer

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