Will Jones, Pharoah is a small CPA firm that focuses primarily on preparing tax returns for small businesses. The company pays a $486 annual fee plus $11 per tax return for a license to use Mega Tax software.
(a) What is the company’s total annual cost for the Mega Tax software:
i. if 316 returns are filed?
ii. If 408 returns are filed?
iii. If 524 returns are filed?
Total cost for 316 returns $
Total cost for 408 returns $
Total cost for 524 returns $

Total cost for 316 returns $3,962

Total cost for 408 returns $4,974

Total cost for 524 returns $6,250

Explanation:

The total cost incurred by Pharoah with the Mega Tax software is given by the fixed cost of $486, referring to the annual fees, added to the cost per tax return of $11 multiplied by the volume of returns filed (n):

i. if 316 returns are filed?  (n = 316)

ii. If 408 returns are filed?  (n = 408)

iii. If 524 returns are filed? (n = 524)

Total cost for 316 returns $3,962

Total cost for 408 returns $4,974

Total cost for 524 returns $6,250

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