201-Quiz2-Version1(Pink)-Solution-S'10 (1)

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Name (Please print): Section: Management 201 - Spring 2010 – Quiz 2 - Chapter 8 (CVP) Version 1 (Pink) - Solution Logical work must be shown on any question to receive positive points. You may not use calculators that can store information or communicate with someone. Cheating on a quiz will result in failure of the course. 1. The Rapid Meal has two restaurants that are open 24 hours per day. Fixed costs for the two restaurants together total \$450,000 per year. Service varies from a cup of coffee to full meals. The average sales check for each customer is \$8.00. The average cost of food is \$1.40 per customer; other variable costs are \$1.80 per customer. The income tax rate is 30%. How many customers are needed to earn an after-tax net income of \$105,000? Number of customers: NIAT = (1-t)[(P – V)X – F] \$105,000 = (1 - .3)[(\$8 – (\$1.40 + \$1.80))X - \$450,000] \$105,000/.7 = (\$4.80)X - \$450,000 \$150,000 = (\$4.80)X - \$450,000 X = 125,000 customers 2. Goldman Company retails two products, a standard and a deluxe version of a luggage carrier.
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