R&R Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs for three types of tax returns follow. Fixed costs total $18,000. Variable Cost Type of Return Easy Moderate Business Sales Mix Fee Charged $ 50 125 275 per Return $ 30 50% 30% 20% 75 100 (1) Determine the weighted-average contribution margin. Sales mix Contribution margin per return Total per unit Easy 50% Moderate 30% Business 20% Weighted-average contribution margin (2) Determine the break-even point in units using the weighted-average contribution margin. Numerator: Denominator: Break Even Units %3D Break even units %3D (3) Determine the number of units of each product that will be sold at the break-even point. Sales mix Number of units to break even. Units sales at the break-even point Easy Moderate Business
R&R Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs for three types of tax returns follow. Fixed costs total $18,000. Variable Cost Type of Return Easy Moderate Business Sales Mix Fee Charged $ 50 125 275 per Return $ 30 50% 30% 20% 75 100 (1) Determine the weighted-average contribution margin. Sales mix Contribution margin per return Total per unit Easy 50% Moderate 30% Business 20% Weighted-average contribution margin (2) Determine the break-even point in units using the weighted-average contribution margin. Numerator: Denominator: Break Even Units %3D Break even units %3D (3) Determine the number of units of each product that will be sold at the break-even point. Sales mix Number of units to break even. Units sales at the break-even point Easy Moderate Business
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:R&R Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs for three types of tax
returns follow. Fixed costs total $18,000.
Variable Cost
per Return
$ 30
Type of Return
Easy
Moderate
Business
Sales Mix Fee Charged
$ 50
125
275
50%
30%
75
20%
100
(1) Determine the weighted-average contribution margin.
Sales mix
Contribution margin per return
Total per unit
Easy
50%
Moderate
30%
Business
20%
Weighted-average contribution margin
(2) Determine the break-even point in units using the weighted-average contribution margin.
Numerator:
Denominator:
Break Even Units
Break even units
(3) Determine the number of units of each product that will be sold at the break-even point.
Sales mix
Number of units to break even.
Units sales at the break-even point
Easy
Moderate
Business
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