Reference no: EM132517418

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.

                                                                    Standard     Multiform          Complex

Billing rate                                                  $50       $125            $250

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

Average contribution margin                             $20        $50             $100

Number of returns prepared                              1,750               500        250

Required

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

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