1. You have the following projections about the costs in a family restaurant for next year. Answer questions a and b, explaining your calculations and answer.

Net income required: 22% on the owner's present investment of $80,000

Income tax rate is 28%

Depreciation:

$76,000, Interest:

Book value of furniture and equipment is

depreciation rate is 20%.

Interest on a loan outstanding of $35,000 is 18%.

Known Costs:

Insurance

License

Utilities

Maintenance

Administration

Salaries

$ 3,000

$ 2,500

$ 8,400

S 3,600

$ 9,800

$41,600

Variable Costs:

Food cost, 38% of sales revenue

Wage cost, 34% of sales revenue Other costs, 18% of sales revenue

1. What sales revenue would the restaurant have to achieve next year in order to acquire the desired net income?
2. What is the required average check needed to achieve the annual sales revenue objective if the restaurant is open 365 days, had 60 seats, and had an average seat turnover of 2.5 times per day?