P5.10 A fast-food restaurant features only three entree items on its menu with the following cost and selling prices:

Item Cost Selling Price 1 $2.00 $6.60 2 4.40 8.80 3 3.90 9.75

a. For each item calculate the food cost percentage.

b. If 50 of each item are sold each day, what will the standard food cost percentage be? What is the contribution margin in dollars?

c. If only 25 each of items one and three were sold and 100 of item two, what effect will this have on the standard cost percentage? What is the contribution margin in dollars?

d. Comment on the results of this analysis.