Alternative 1- Food Truck

After experiencing such great success with their food cart, Nathan and Cody are considering purchasing a food truck to serve other communities. This would allow the Great Tamale, GT, to reach even more customers in different geographic locations.

There would be an increase in the selling price per plate. There will also be an increase in the fixed costs of $30,000 for advertising to inform the public of this change (this amount is already included below under Food Truck data). The financial information is presented below for this alternative as well as the original data. Assume 31,125 plates are sold for the food cart and 45,625 plates are sold for the food truck.

	Food Cart	Food Truck
Sales	$ 217,875.00	$365,000.00
Variable costs	46,687.50	103,437.50
Contribution margin	171,187.50	261,562.50
Fixed costs	90,000.00	147,500.00
Income before taxes	81,187.50	114,062.50
Income taxes (32% rate)	25,980.00	36,500.00
Net income	$ 55,207.50	$ 77,562.50

Alternative 1 Requirements (continued)

5.) If the company wishes each scenario, food cart and food truck, to generate net income (after-tax) of $170,000, what is the amount of sales that needs to be generated? How many plates will then need to be sold? Prepare a contribution margin statement for this step and verify that your after-tax net income in fact equals $170,000 for both the food cart and food truck.

6.) Assume that the company expects sales to decline by 20% next year. There will be no change in plate price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two types (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings).

I really need help with both of these questions please. With steps