17 der 25% 00 P6.3A (LO 2), AN Service The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in south- western style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows. Percent of Contribution Total Sales Margin Ratio Appetizers 15% 505 Main entrees 50% 25% Desserts 10% 50% Beverages 80% Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $117,000. The company has fixed costs of S1,033,000 per year. Instructions a. Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. b. Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heav. ily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase tixed costs by 55856800. At the same time, he is proposing to change the sales mix to the following. Percent of Contribution Total Sales Margin Ratio Appetizers 25 50% Main entrees 105 Desserts 10% SO Beverages 80 Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income. c. Suppose that Paul reduces the selling price on entroes and increases tied costs as proposed in partib, but customers are not swayed by the marketing efforts and the sales mit remains what it was in parti. Compute the total restaurant sales and the sales of each product line that would be ecossary to achieve the desired tre not income, Comment on the potential tisks and benefits of this state SiMessage