A motel has a rooms department and a dining room, and the fixed cost is $470,000. Annual sales revenue and cost figures are as follows:

Rooms Food Total

Sales Revenue $750,000 $250,000 $1,000,000

Variable Costs (187,500) ( 150,000) ( 337,500)

Contribution Margin $562,500 $ 100,000 $662,500

1. What would total sales revenue have to be to achieve all of the following:

Additional operating income of $50,000

Additional fixed cost of $20,000

The sales revenue ratio changes from 75% for rooms and 25% for food to 70% for rooms and 30% for food.

Rooms variable cost increase to 30% and food variable cost decrease to 50%