Question
Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics: Individuals Partnerships Corporations Price
Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics: Individuals Partnerships Corporations Price charged per tax return $ 160 $ 850 $ 1,750 Variable cost per tax return (including wage paid to tax preparer) $ 105 $ 750 $ 1,590 Expected tax returns prepared per year 56,000 7,000 7,000 The total fixed costs per year for the company are $910,000. Required: a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point. c. Suppose the product sales mix changes so that, for every ten tax returns prepared, six are for individuals, one is for a partnership, and three are for corporations. Now what is the break-even volume for Sell Block?
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