Answer:
Accounting revenue = $7,500,000
Tax revenue = $5,000,000
Explanation:
Contribution margin is net of Sales price and variable cost per unit.
Break-even is the level of sales at which the business have no profit no loss. At this point business only covers the the variable and fixed cost.
Average contribution = (Revenue from Accounting x Contribution of accounting services ) + (Revenue from Tax x Contribution of Tax services )
Average contribution = (60% x 30%) + (40% x 40%) = 18% + 16% = 34%
Revenue at break-even = Fixed cost / Contribution margin ratio
Revenue at break-even = $4,250,000 / 34% = $12,500,000
Accounting revenue = $12,500,000 x 60% = 7,500,000
Tax revenue = $12,500,000 x 40% = 5,000,000
