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Multiple Product Break-Even Analysis Joe's Tax Service prepares tax returns for low-to middle-income taxpayers. Its service...

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 $80,000.

STANDARD MULTIFORM COMPLEX
BILLING RATE $75 $150 $275
AVERAGE VARIABLE COSTS (30) (75) (150)
AVERAGE CONTRIBUTION MARGIN $45 $75 $125
NUMBER OF RETURNS PREPARED 1,750 500 250

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

  • Round contribution margin to three decimal places.
  • Round break-even sales volume to the nearest dollar.
PRODUCT WEIGHTED SELLING PRICE WEIGHTED CONTRIBUTION MARGIN
STANDARD $ $
MULTIFORM
COMPLEX
TOTAL $ $
CONTRIBUTION-MARGIN-RATIO
BREAK-EVEN SALES VOLUME $

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

Round answer to the nearest whole number.

$
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Answer #1

* Margin of Safety = Total sales - Break even sales

Margin of Safety = 110 * 2500 - 149153

Margin of Safety = 125847

*Please comment if you face any difficulty and please don't forget to provide positive rating*

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