P8.1 A restaurant with an average check of $14 per guest has the following avera

Question

P8.1

A restaurant with an average check of $14 per guest has the following average monthly figures: Sales revenue $700,000 Variable costs 434,000 Fixed costs 168,000 a. What is breakeven sales revenue? b. If actual sales revenue was $640,000, what would the restaurant’s op-erating income be? c. If actual sales revenue was $640,000, how many fewer customers per month would be served than at the forecasted sales revenue level of $700,000? The average check remains at $14.

P8.2

A small inn has annual fixed costs of $88,000, variable costs of 68% of sales revenue, and a tax rate of 30%. The owner wants an after-tax net income of $33,600. What sales revenue must be achieved to provide $33,600 net income after tax? Prepare a contribution margin income state-ment to confirm the calculated required sales revenue.

Explanation / Answer

Part 2

a No of Guest =700000/14 50000 variable cost per unit =4340000/50000 8.68 Contribution =14-8.68 5.32 Break even quantity =Fixed cost /contribution 31578.94737 Break even revenu =31578.95 *14 442105.26 b Sales Revenue 640000/14 =45714.29 units 640000 Variable cost 45714.29*8.68 3,96,800 Contribution Margin 2,43,200 Less: Fixed Costs 1,68,000 Operating Income 75,200 C 50000-45714.29 4285.71 units

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