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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Extensions of the CVP Model—Multiple Products
Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics:
| ?Individuals | ?Partnerships | ?Corporations |
Price charged per tax return | $200 | $1,000 | $2,000 |
Variable cost per tax return (including wage paid to tax preparer) | $180 | $900 | $1,800 |
Expected tax returns prepared per year. | 60,000 | 4,000 | 16,000 |
The total fixed costs per year for the company are $3,690,000.
Required
a. What is the anticipated level of profits for the expected sales volumes?
b. Assuming that the product mix is the same at the break-even point, compute the break-even point.
c. Suppose the product sales mix changes so that, for every ten tax returns prepared, six are for individuals, one is for a partnership, and three are for corporations. Now what is the breakeven volume for Sell Block?
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Step 1 of 5
a.
Calculate the anticipated level of profits for the expected sales volume
The company anticipated profit is $1,110,000 for the expected sales volume.
Step 2 of 5
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