ndry Associates offers a variety of 9. MULTIPLE PRODUCT BREAKEVEN POINT. Ta vari
ID: 2332015 • Letter: N
Question
ndry Associates offers a variety of 9. MULTIPLE PRODUCT BREAKEVEN POINT. Ta variable costs per job completed but low fixed costs. In fact, it only costs Roger Tando $25,000 a month in fixed costs to run his business. The details on tax and accounting services for local small businesses. It is a simple operation, with hich the various products Tandry offers are in the table below. Tandry Associates Price per Month $500 $750 $1,000 $600 $500 Variable Cost per Month Product Jobs Sold Basic Bookkeeping Tax Preparation Audit Services Billing Services Payroll Services $400 $600 $900 $500 $400 100 50 25 50 75Explanation / Answer
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
Job Sold
100
50
25
50
75
300
Product Mix
33.33%
16.67%
8.33%
16.67%
25.00%
100.00%
Working
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
A
Price per month
$ 500.00
$ 750.00
$ 1,000.00
$ 600.00
$ 500.00
B
Variable Cost per unit
$ 400.00
$ 600.00
$ 900.00
$ 500.00
$ 400.00
C = A - B
Contribution Margin per unit
$ 100.00
$ 150.00
$ 100.00
$ 100.00
$ 100.00
D
Product Mix
33.33%
16.67%
8.33%
16.67%
25.00%
100.00%
E = C x D
Weighted Average Contribution Margin
$ 33.33
$ 25.00
$ 8.33
$ 16.67
$ 25.00
$ 108.33
Answer to Part (e)
Working
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
A
Total Jobs
100
50
25
50
75
300
B
Break Even no. of jobs
77
38
19
38
58
231
C = A - B
Margin of Safety in no. of jobs
23
12
6
12
17
69
D
Price per month
$ 500.00
$ 750.00
$ 1,000.00
$ 600.00
$ 500.00
E = C x D
Margin of Safety in Revenue Dollars
$ 11,538
$ 8,654
$ 5,769
$ 6,923
$ 8,654
$ 41,538
Answer to part (f)
A
Total Fixed Cost
$ 25,000.00
B
Desired Profits before Tax
$ 10,000.00
C = A + B
Total Contribution margin required
$ 35,000.00
D
Weighted Average Contribution Margin
108.33
E = C/D
Total no. of jobs required for earning desired profits
323
F x 33.33%
Basic Book Keeping
108
F x 16.67%
Tax Preparation
54
F x 8.33%
Audit Services
27
F x 16.67%
Billing Service
54
F x 25%
Payroll services
81
Working
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
A
Jobs required to earn target profits
108
54
27
54
81
B
Price per month
$ 500.00
$ 750.00
$ 1,000.00
$ 600.00
$ 500.00
C = A x B
Required Revenue dollars of Sales
$ 53,846
$ 40,385
$ 26,923
$ 32,308
$ 40,385
$ 193,846
Answer to part (g)
A
Total Fixed Cost
$ 25,000.00
B
Desired Profits after Tax
$ 10,000.00
C = B/80%
Desired profit before tax
$ 12,500.00
D = A + C
Total Contribution margin required
$ 37,500.00
E
Weighted Average Contribution Margin
108.33
E = C/D
Total no. of jobs required for earning desired profits
346
F x 33.33%
Basic Book Keeping
115
F x 16.67%
Tax Preparation
58
F x 8.33%
Audit Services
29
F x 16.67%
Billing Service
58
F x 25%
Payroll services
87
Working
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
A
Jobs required to earn target profits
115
58
29
58
87
346
B
Price per month
$ 500.00
$ 750.00
$ 1,000.00
$ 600.00
$ 500.00
C = A x B
Required Revenue dollars of Sales
$ 57,500
$ 43,500
$ 29,000
$ 34,800
$ 43,500
$ 208,300
Basic Book Keeping
Tax Preparation
Audit Services
Billing Service
Payroll services
TOTAL
Job Sold
100
50
25
50
75
300
Product Mix
33.33%
16.67%
8.33%
16.67%
25.00%
100.00%
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