Will Jones, LIP is a small CPA firm that focuses primarily on preparing tax returns for small businesses. The company pays a $403 annual fee plus $11 per tax return for a license to use Mega Tax software.

1a. What is the company's total annual cost for the Mega Tax software, if 332 returns are filed?

b. If 424 returns are filed?

c. If 522 returns are filed?

2a. What is the company's cost per return for the Mega Tax software, if 332 returns are filed?

b. If 424 returns are filed?

c. If 522 returns are filed?

Answer and Explanation:

1. The computation of the total annual cost in each case is shown below:

Total annual cost = Annual fee + license per tax return × number of returns filed

a. For 332 returns

= $403 + $11 × $332

= $403 + $3,652

= $4,055

b. For 424 returns

= $403 + $11 × $424

= $403 + $4,664

= $5,067

c. For 522 returns

= $403 + $11 × $522

= $403 + $5,742

= $6,145

2. Now the cost per return is

Cost per return = Total annual cost ÷ number of returns filed

a. For 332 returns

= $4,055 ÷ 332 retunrs

= $12.21

b. For 424 returns

= $5,067 ÷ 424 returns

= $11.95

c. . For 522 returns

= $6,145 ÷ 522 returns

= $11.77

24 years, i believe is the correct answer.