1.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 revenue (SR%), selling price (SP), and variable costs (VC) is shown in the following table:

Total variable cost of beverages averages 55%. The restaurant has fixed costs of $546,000 a year and wants an operating income of at least $25,000 a year. What is level of sales revenue (SR) required for the desired operating income?

Note: The table below summarize the information and can help you answer this question. Work out the CM% column and the SR%*CM% column. Weighted CM% is the sum of all numbers in the SR%*CM% column. Finally, use the weighted CM% in the CVP equation to find the required sales revenue.

Menu item SP VC/unit SR% CM% SR% * CM%

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%

Beverage 55% 20%

Total 100% Weighted CM%: