Will Jones, Pharoah is a small CPA firm that focuses primarily on preparing tax returns for small businesses. The company pays a $424 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 if 342 returns are filed? If 446 returns are filed? If 500 returns are filed?

Answer and Explanation:

The computation of the total annual cost for each returns are shown below:

a. For 342 returns

= $424 + $11 * $342

= $424 + $3,762

= $4,186

b. For 446 returns

= $424 + $11 * $446

= $424 + $4,906

= $5,330

c. For 500 returns

= $424 + $11 * $500

= $424 + $5,500

= $5,924

We simply pay the annual fees and then added the added value i. e annual fee multiply with the each returns filed