A restaurant is being planned that will require an investment of $150,000 in equipment by the owner. The following shows forecasted variable cost percentages, identifiable fixed, and semifixed costs.

a. What is the breakeven level of sales revenue for the restaurant? Prepare a contribution margin income statement to confirm the breakeven calculations.

b. What required sales revenue is needed if the owner wants a 15 percent before-tax return on investment? Prepare a contribution margin income statement to confirm the CVP calculations.

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Variable costs will be: Food cost is 40% of sales revenue Wage cost is 25% of sales revenue Other variable costs are 10% of sales revenue Other known costs will be: Management salary and wages $48,000 Insurance expense 2,800 Advertising expense 4,500 Utilities and telephone expense 1,020 Rent expense Equipment depreciation expense 12,000 20%