Exercise 18-23 CVP analysis using composite units LO P4

R&R Tax Service offers tax and consulting services to individuals and small businesses. Data for fees and costs of three types of tax returns follow. R&R provides services in the ratio of 4:3:3 (easy, moderate, business). Fixed costs total $19,575 for the tax season.

Type of Return	Fee Charged					Variable Cost per Return
Easy (form 1040EZ)		$	44				$	27
Moderate (form 1040)			119					72
Business			269					97

Fee Charged Total per composite unit (1) Determine the selling price per composite unit. Ratio Easy (form 1040EZ) Moderate (form 1040) Business Total per composite unit (2) Determine the variable costs per composite unit. Ratio Variable cost per return Easy (form 1040EZ) Moderate (form 1040) Business Contribution margin per composite unit 0.00 0.00 Contribution margin (3) Determine the break-even point in composite units. Choose Numerator: Choose Denominator: Break Even Units Break even units 0 (4) Determine the number of units of each product that will be sold at the break-even point. Number per composite unit Number of composite units to break even. Units sales at the break-even point Easy (form 1040EZ) Moderate (form 1040) Business