Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax...

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Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns ha

business accounting

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Answer 1

Answer #1

1-
Anticipated level of profits		Individuals	Partnerships	corporations	total
total revenue	expected tax returns*price charged per tax return	13920000	7200000	11700000	32820000
less total variable cost	expected tax returns*variable cost per tax return	12000000	6600000	10680000	29280000
total contribution margin		1920000	600000	1020000	3540000
total fixed cost					501500
operating profit					3038500

B-
		Individuals	Partnerships	corporations	total
Units sold	Units sold/total of units sold	48000	6000	6000	60000
sales mix ratio =		80%	10%	10%
contribution margin per tax return		40	100	170
sales mix ratio*contribution margin per tax return		32	10	17
Weighted average contribution margin =sum of sales mix ratio*contribution margin	59

Break even point =total fixed cost/weighted average contribution margin	501500/59	8500

C-
		Individuals	Partnerships	corporations	total
sales mix ratio =		0.6	10.00%	30.00%	10
contribution margin per tax return		40	100	170
sales mix ratio*contribution margin per tax return		24	10	51
Weighted average contribution margin =sum of sales mix ratio*contribution margin	85

Break even point =total fixed cost/weighted average contribution margin	501500/85	5900

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