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wk 4 written assignmant-Ch21_Case1

# wk 4 written assignmant-Ch21_Case1 - Decision Case...

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Decision Case 1 (Pg.1091) Annual fixed costs: Chef's and dishwasher's salaries \$61,200

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Rent (premises, equipment) (4000 x 12) 48,000 Cleaning (linen and premises) (800 x 12) 9,600 Replacement of dishes, cutlery, glasses (300 x 12) 3,600 Utilities, advertising,, telephone (2300 x 12) 27,600 \$150,000 Breakeven Point: Units sold = Fixed costs Contribution margin per unit Breakeven sales in units = \$150,000 5000 Units \$45 - \$15 For the income of an extra \$75,600 is: To have an income of 75,600 = 75,600 + 150,000 = \$225,600 Breakeven Point for the income of an extra \$75,600 is: Units sold = Fixed costs Contribution margin per unit Breakeven sales in units = \$225,600 75200 Units \$45 - \$15 To earn target operating income: = + To earn target Breakeven sales in Average revenue Per
= + = 5000 Unit x \$45 Per meal = \$225,000 To earn target operating income with an income of an extra \$75,600 is: = + = 7520 Units x \$45 Per meal = \$338,400 Number of meals per night to earn a target income breaking even: # of meals per night = 5000 Unites = 13.7 365 Days = \$616.44 x 365 = \$225,000.00 Number of meals per night to earn a target income of \$75,600: # of meals per night = 7520 Unites = 20.6 365 Days = \$927.12 x 365 = \$338,400.00 To earn target operating income Breakeven sales in unit Average revenue Per meal To earn target operating income To earn target operating income Breakeven sales in unit Average revenue Per meal To earn target operating income About 14 Meals a night at \$45 About 21 Meals a night at \$45

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They should open the restaurant because they will be able to least to break even by selling 14 meals a day. In order to come ahead with an income of \$75,600 a year they would have to sell at least 21 meals a day I believe that they can do that with no problem therefore the couple should open the restaurant.
Financial Statement Case (35 min.) Req. 1 Req. 2 Amazon.com is a retailer that purchases the merchandise it sells. Therefore, cost of sales is a variable cost that changes with sales. In contrast, technology and content is a fixed cost that does not vary with

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