Reference no: EM131679944

Question - 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 $55,000.

Standard Multiform Complex

Billing rate   $55 $130 $255

Average variable costs (30) (75) (150)

Average contribution margin $25 $55 $105

Number of returns prepared 1,750 500 250

Required -

(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.

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

• Round answer to the nearest dollar.