3.An analysis of the 4C Companys restaurant costs for the Year 2007 revealed the following:Food and Beverage: Directly variable with total sales revenueSalary and Wages: $156,400 fixed; the remainder are directly variable with total sales revenue Laundry: Directly variable with total sales revenue

Kitchen fuel: $3,800 fixed; the remainder are directly variable with total sales revenue

China and tableware are directly variable with total sales revenue

Glass is directly variable with total sales revenue.

Contracted cleaning is fixed

Licenses are fixed

Other operating expenses are directly variable with the total sales revenue

Administrative and general is fixed

Marketing is fixed

Utilities costs: $3,000fixed; the remainder directly variable with total sales revenue

Insurance is fixedRent is fixed

Interest is fixed

Depreciation is fixed

a.Refer to the income statements in Group Case Study 1 and calculate the restaurants total variable costs as a percentage of total sales revenue.

b.Calculate the restaurants total fixed costs

c .Calculate the restaurants breakeven sales revenue and also express the breakeven in terms of the number of guests (using the average check from Group Case Study 1)

d.To increase the operating incomeby $20,000 inYear 2007s sales revenue, how many extra guests are required? 4C will spend $1,000 for additional advertising and promotion as a fixed costfor Year 2007.

Refreces if Need

Overall Average Check= $9.59

"4C Company Income Statement For the Year ended December 31, 2007"		"Common-size Income Statement "
Sales Revenue
Food Operations	$ 458,602	71.8%
Beverage Operations	180,509	28.2%
Total Sales Revenue	639,111	100.0%
Cost of Sales, Food
Beginning Inventory	6,128
Purchases	181,110
Less: Ending Inventory	(5,915)
Cost of Sales, Food	181,323	39.5%
Cost of Sales, Beverages
Beginning Inventory	3,207
Purchases	38,307
Less; Ending Inventory	(2,211)
Cot of Sales Beverages	39,303	21.8%
Total Cost of Sales	220,626	34.5%
Gross Margin	418,485	65.5%
Operating Expenses
Salaries and wages expenses	$ 223,543	35.0%
Laundry Expense	16,609	2.6%
Kitchen Fuel Expense	7,007	1.1%
China and tableware Expense	12,214	1.9%
Glassware Expense	1,605	0.3%
Contract Cleaning expense	5,906	0.9%
Liscenses Expense	3,205	0.5%
Other Operating Expense	4,101	0.6%
Administrative and general Expenses	15,432	2.4%
Marketing Expenses	6,917	1.1%
Utilities Expenses	7,918	1.2%
Insurance Expense	1,895	0.3%
Rent Expense	24,000	3.8%
Interest Expense	23,981	3.8%
Deprecition Expense [$13,752 + $6,372]	20,124	3.1%
Total Operating Expenses	374,457	58.6%
Operating Income	44,028	6.9%
Income Tax expense [$44,028 x 22%]	9,686	1.5%
Net Income	$ 34,342	5.4%

Income Statement after adjusted Trial Balance

1. The average check for food and beverage

2. 1. The average lunch check for food and beverage

Revenue per meal period

45% x 639,111 = 287,599.95

Meals sold per period

312 x 84 x 1.5 = 39,312

Average beverage revenue per period

20% x 287,599.95= $57,519.99

Average check for food

(287,599.95 - 57,519.99) / 39,312 = $5.85

Average check for beverages

$57,519.99 / 39,312 = $1.46

The average dinner check for food and beverage

Revenue per meal period

55% x 639,111 = 351,511.05

Meals sold per period

260 x 84 x 1.25 = 27,300

Average beverage revenue per period

80% x 351,511.05= $281,208.84

Average check for food

(351,511.05 - 281,208.84) / 27,300 = $2.58

Average check for beverages

$281,208.84 / 27,300 = $10.30

4C Company Adjusted Trial Balance December 31, 2007 Accounts Debit Credit Cash $32,885 Credit card receivbles 13,683 Accounts Receivables 3,421 Inventories, Food 5,915 Inventories, Beverages 2,211 PrePaid insurance 2,136 Equipment 166,105 Furnishings 47,224 Accounts Payable 10,544 Bank Loan Payable 160,185 Common Stock 50,000 Sales Revenue, Food Operartions 458,602 Sales Revenue, Beverage Operartions 180,509 Purchases, food (net) 181,110 Purchases, Bevarages (net) 38,307 Salaies and wages expense 223,543 Laundry expense 16,609 Kitchen Fuel Expense 7,007 China and Tableware Expens 12,214 Glassware expense 1,605 Contract cleaning Expense 5,906 Lisenseces Expense 3,205 Misc. operating expense 5,310 Administravtive- general expe 15,432 Marketing expenses 6,917 Utilities expenives 7,918 Insurance Expense 1,895 Rental Expense 24,000 Depreciation Expense 11,791 Interest Expense 23,491 Unadjusted Trial Balance Tot 859,840 859,840 32,885 13,683 3,421 5,915 2,211 8,126 2,136 60,251 171,524 5,418.67 53,596 6,372 213,329 273,580 RSSELS Current Assests B Cash Credit Card Receivables 5 Accounts receivable Inventories Food - Inventories Beverages Total Inventories Prepaid Expenses 0 Total Current Assests 1 2 Property Plant & Equipment 3 Equipment 4 Less: Accumluated Depreciation 5 Furinshings 6 Less Accumulated Depreciation 7 Net Property Plant & Equipment 8 Total Assests 9 Liabilities & Stockholdes' Equity 1 Current Liabilities 2 Accounts payable 3 Accrued payroll payable 4 Current Portion Bank Loan payable 5 Income taxes payable 6 Total Current Liabilities 7 8 Long Term Liabilities 9 Bank Loan payable 0 Total Liabilities 1 2 Stockholders' Equity 3 Common Stock 4 Retained Earnings 5 Total Stockholders' Equity 6 Total Liabilities & Stockholders' Ec 10,544 2,215 3,333 490 16,582 160,185 176,767 50,000 40,281 90,281 267,048 Sales Revenue Food Operations Beverage Operations Total Sales Revenue 458,602 180,509 639,111 71.8 28.2 100% 0.96 28.3 6,128 181,110 5,915 181,323 0.9 28.4 0.5 6 3207 38,307 2,211 39,303 220,626 418,485 0.35 6.15 34.5 65.5 Cost of Sales, Food Beginning Inventory Purchases Less: Ending Inventory Cost of Sales Food Cost of Sales, Beverages Beginning Inventory Purchases Less; Ending Inventory Cot of Sales Beverages Total Cost of Sales Gross Margin Operating Expenses Salaries and wages expenses Laundry Expense Kitchen Fuel Expense China and tableware Expense Glassware Expense Contract Cleaning expense Liscenses Expense Other Operating Expense Administrative and general Expenses Marketing Expenses Utilities Expenses Insurance Expense Rent Expense Interest Expense Deprecition Expense Total Operating Expenses Operating Income Income Tax expense Net Income 35 2.6 1.1 1.9 0.25 0.9 0.5 0.8 2.4 223,543 16,609 7,007 12,214 1,605 5,906 3,205 5,310 15,432 6,917 7,918 1,895 24,000 23,491 11,791 366,843 51,642 11,361.24 40,281 1.08 1.2 0.3 3.8 3.7 1.8 57.4 8.1 1.8 6.3 Table 1 Results of Operations of Table service, Family-oriented, Lunch and Dinner Restaurant Low (%) 68,0 16.0 High (%) 84.0 33.0 100% 30.0% 17.0% 35.0% 62.0% 40.0% 33.0% 44.0% 71.0% Sales Revenue Food operations Beverage operations Total Sales Revenue Cost of sales, food Cost of sales, beverages Total Cost of Sales Gross Margin Operating Expenses Wages expense Salaries expense Employee benefits expense Employee meals expense Laundry, linen, uniforms expense Replacements expense Services supplies expense Menus, printing expense Miscellaneous expense Entertainment expense Advertising, promotion expense Utilities expense Administrative expense Repairs, maintenance expense Rent expense Property taxes expense Insurance expense Interest expense Depreciation expense Franchise expense (if applicable) Total Operating Expenses Operating Income (before tax) 26.0% 2.0% 3.0% 1.0% 1.5% 0.5% 1.0% 0.3% 0.3% 0.5% 0.7% 2.0% 3.0% 1.0% 4.5% 0.5% 0.8% 0.3% 2.0% 3.0% 51.5% 31.096 6.0% 5.0% 2.0% 2.0% 1.0% 2.0% 0.5% 0.5% 2.0% 2.5% 4.0% 6.0% 2.0% 7.0% 1.5% 1.0% 1.0% 2.8% 8.0% 62.5% 12.0% 1.5% 4C Company Adjusted Trial Balance December 31, 2007 Accounts Debit Credit Cash $32,885 Credit card receivbles 13,683 Accounts Receivables 3,421 Inventories, Food 5,915 Inventories, Beverages 2,211 PrePaid insurance 2,136 Equipment 166,105 Furnishings 47,224 Accounts Payable 10,544 Bank Loan Payable 160,185 Common Stock 50,000 Sales Revenue, Food Operartions 458,602 Sales Revenue, Beverage Operartions 180,509 Purchases, food (net) 181,110 Purchases, Bevarages (net) 38,307 Salaies and wages expense 223,543 Laundry expense 16,609 Kitchen Fuel Expense 7,007 China and Tableware Expens 12,214 Glassware expense 1,605 Contract cleaning Expense 5,906 Lisenseces Expense 3,205 Misc. operating expense 5,310 Administravtive- general expe 15,432 Marketing expenses 6,917 Utilities expenives 7,918 Insurance Expense 1,895 Rental Expense 24,000 Depreciation Expense 11,791 Interest Expense 23,491 Unadjusted Trial Balance Tot 859,840 859,840 32,885 13,683 3,421 5,915 2,211 8,126 2,136 60,251 171,524 5,418.67 53,596 6,372 213,329 273,580 RSSELS Current Assests B Cash Credit Card Receivables 5 Accounts receivable Inventories Food - Inventories Beverages Total Inventories Prepaid Expenses 0 Total Current Assests 1 2 Property Plant & Equipment 3 Equipment 4 Less: Accumluated Depreciation 5 Furinshings 6 Less Accumulated Depreciation 7 Net Property Plant & Equipment 8 Total Assests 9 Liabilities & Stockholdes' Equity 1 Current Liabilities 2 Accounts payable 3 Accrued payroll payable 4 Current Portion Bank Loan payable 5 Income taxes payable 6 Total Current Liabilities 7 8 Long Term Liabilities 9 Bank Loan payable 0 Total Liabilities 1 2 Stockholders' Equity 3 Common Stock 4 Retained Earnings 5 Total Stockholders' Equity 6 Total Liabilities & Stockholders' Ec 10,544 2,215 3,333 490 16,582 160,185 176,767 50,000 40,281 90,281 267,048 Sales Revenue Food Operations Beverage Operations Total Sales Revenue 458,602 180,509 639,111 71.8 28.2 100% 0.96 28.3 6,128 181,110 5,915 181,323 0.9 28.4 0.5 6 3207 38,307 2,211 39,303 220,626 418,485 0.35 6.15 34.5 65.5 Cost of Sales, Food Beginning Inventory Purchases Less: Ending Inventory Cost of Sales Food Cost of Sales, Beverages Beginning Inventory Purchases Less; Ending Inventory Cot of Sales Beverages Total Cost of Sales Gross Margin Operating Expenses Salaries and wages expenses Laundry Expense Kitchen Fuel Expense China and tableware Expense Glassware Expense Contract Cleaning expense Liscenses Expense Other Operating Expense Administrative and general Expenses Marketing Expenses Utilities Expenses Insurance Expense Rent Expense Interest Expense Deprecition Expense Total Operating Expenses Operating Income Income Tax expense Net Income 35 2.6 1.1 1.9 0.25 0.9 0.5 0.8 2.4 223,543 16,609 7,007 12,214 1,605 5,906 3,205 5,310 15,432 6,917 7,918 1,895 24,000 23,491 11,791 366,843 51,642 11,361.24 40,281 1.08 1.2 0.3 3.8 3.7 1.8 57.4 8.1 1.8 6.3 Table 1 Results of Operations of Table service, Family-oriented, Lunch and Dinner Restaurant Low (%) 68,0 16.0 High (%) 84.0 33.0 100% 30.0% 17.0% 35.0% 62.0% 40.0% 33.0% 44.0% 71.0% Sales Revenue Food operations Beverage operations Total Sales Revenue Cost of sales, food Cost of sales, beverages Total Cost of Sales Gross Margin Operating Expenses Wages expense Salaries expense Employee benefits expense Employee meals expense Laundry, linen, uniforms expense Replacements expense Services supplies expense Menus, printing expense Miscellaneous expense Entertainment expense Advertising, promotion expense Utilities expense Administrative expense Repairs, maintenance expense Rent expense Property taxes expense Insurance expense Interest expense Depreciation expense Franchise expense (if applicable) Total Operating Expenses Operating Income (before tax) 26.0% 2.0% 3.0% 1.0% 1.5% 0.5% 1.0% 0.3% 0.3% 0.5% 0.7% 2.0% 3.0% 1.0% 4.5% 0.5% 0.8% 0.3% 2.0% 3.0% 51.5% 31.096 6.0% 5.0% 2.0% 2.0% 1.0% 2.0% 0.5% 0.5% 2.0% 2.5% 4.0% 6.0% 2.0% 7.0% 1.5% 1.0% 1.0% 2.8% 8.0% 62.5% 12.0% 1.5%