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 $50,000.
StandardMultiformComplexBilling rate$50$125$250Average variable costs(30)(75)(150)Average contribution margin$20$50$100Number of returns prepared1,750500250
Required
(a.) Determine Joe's break-even dollar sales volume.
Product
Weighted
Selling Price
Contribution
Margin
StandardAnswer
Answer
MultiformAnswer
ComplexAnswer
TotalAnswer
Contribution margin ratio:Answer
Break-even sales volume:Answer
(b.) Determine Joe's margin of safety in sales dollars.
$Answer
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