Gabbard and Fink CPA Firm Leases Tax Software from BGG

question 1

Essay

Gabbard and Fink CPA firm leases tax software from BGG Tax Software Company to prepare federal and state income tax returns.The lease agreement calls for a base charge of $5,000 per year plus $100 per year for each state for which returns are prepared.In addition, Gabbard and Fink are charged $2 ($1 for federal and $1 for state) for each tax return prepared.All of their clients have federal and state returns prepared, with 60 percent in Arkansas and 40 percent in Oklahoma.
Required:
a.What is the firm's total annual cost for the software if a total 2,500 returns are prepared?
b.What is the firm's cost per unit at a level of 2,500 returns?
c.What is the firm's cost per return if 2,000 are prepared?
d.Besides software lease cost, list five other costs that Gabbard and Fink must consider when the company set the selling price to be charged to the clients.

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Definitions:

Ophthalmoscope

A medical instrument used by healthcare professionals to examine the interior structures of the eye, including the retina and optic nerve.

Astigmatism

A common vision condition caused by an imperfection in the curvature of the eye's cornea or lens, leading to blurred or distorted vision.

Nearsighted

A common vision condition where close objects appear clearly, but distant ones are blurry, also known as myopia.

Auscultate

The act of listening to the internal sounds of the body, typically using a stethoscope, as part of a medical examination.