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A neighborhood restaurant opens for lunch only and has a menu limited to five meals. The history of each menu item relative to its percentage of total sales, selling price (SP), and variable costs (VC) are shown in the following: Menu Item SP VC SR% Food 1 $15.00 $7.75 16% Food 2 12.95 7.50 20 Food 3 11.00 5.50 22 Food 4 8.95 2.85 14 Food 5 9.95 6.50 8 Total variable cost of beverages averages 55 percent. The restaurant has fixed costs of $546,000 a year and wants an operating income (before tax) of at least $25,000 per year. a. What level of revenue will give the desired operating income before tax?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9982617

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