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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
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 TPG's fixed costs (rent, utilities, wages, and so forth) totaled $120,000 last year. Additional information from the prior year follows. Standard Complex Full-Service Billing rate $ 90.00 $ 300.00 $ 200.00 Average variable costs $ (60.00) $ (180.00) $ (90.00) Average contribution margin $ 30.00 $ 120.00 $ 110.00 Number of returns prepared 1500 200 800 (a) Determine the weighted-average unit contribution margin per billing using the number of returns prepared to estimate the sales mix. $ (b) Determine the weighted-average unit contribution margin ratio. (c) Determine TPG's break-even dollar sales volume. $ (d) In the absence of income taxes, what sales volume in dollar amount will provide an annual profit of $100,000, assuming sales mix remains constant? $
| 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 TPG's fixed costs (rent, utilities, wages, and so forth) totaled $120,000 last year. | |||||||||
| Additional information from the prior year follows. | |||||||||
| Standard | Complex | Full-Service | |||||||
| Billing rate | $ 90.00 | $ 300.00 | $ 200.00 | ||||||
| Average variable costs | $ (60.00) | $ (180.00) | $ (90.00) | ||||||
| Average contribution margin | $ 30.00 | $ 120.00 | $ 110.00 | ||||||
| Number of returns prepared | 1500 | 200 | 800 | ||||||
| (a) Determine the weighted-average unit contribution margin per billing using the number of returns prepared to estimate the sales mix. | |||||||||
| $ | |||||||||
| (b) Determine the weighted-average unit contribution margin ratio. | |||||||||
| (c) Determine TPG's break-even dollar sales volume. | |||||||||
| $ | |||||||||
| (d) In the absence of income taxes, what sales volume in dollar amount will provide an annual profit of $100,000, | |||||||||
| assuming sales mix remains constant? | |||||||||
| $ | |||||||||
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Principles Of Accounting And Principles Of Financial Accounting
Authors: Belverd E Needles, Marian Powers, Susan V Crosson
12th Edition
1133962459, 9781133962458
