QUESTION 1 Incorrect Mark 0.00 out of 11.00
Multiple Product Break-Even Analysis
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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 $55,000.
Standard Multiform Complex
Billing rate
$55
$130
$255
Avergae variable costs
(30)
(75)
(150)
Avergae contribution margin
$25
$55
$105
Number of returns prepared
1,750
500
250
Required
(a.) Determine Joe's break-even dollar sales volume.
\textbullet Round contribution margin to three decimal places.
\textbullet Round break-even sales volume to the nearest dollar.
Weighted
Contribution
Margin
Product
Weighted
Selling Price
Standard
87,500 \times
35,000 \times
Multiform
62,500 \times
25,000 \times
Complex
62,500 \times
25,000 \times
Total
212,500 \times
$
85,000 \times
Contribution margin ratio:
40 \times
Break-even sales volume:
125,000
(b.) Determine Joe's margin of safety in sales dollars.
Round answer to the nearest dollar.
$ 87,500
