Average dinner sale price - $40 Income statement - La Brasserie restaurant Revenues $2,098,400 Average lunch sale price - $20 Cost of sales, all variable 1.246,500 Assume that the variable cost of preparing and Gross profit 851,900 serving dinner is also twice that of a lunch Operating expenses The restaurant serves twice as many lunches Variable 222,380 as dinners Fixed 170,940 Administrative expenses, all fixed 451,500 Assume - restaurant open for 305 days Net income $ 7,080 Hint: Find the contribution margin provided by the addition of 3 dinners and 6 lunches 2. Suppose that an extra annual advertising expenditure of $15,000 would increase the average daily volume by three dinners and six lunches, and that there is plenty of capacity to accommodate the extra business. Prepare an analysis for the management of La Brasserie, explaining whether this would be desirable. ICE-3 (Work as a group of 3-4. Submit to Canvas by 02/17/2020, 11:59 PM) Income statement -La Brasserie restaurant $2,098,400 1.246,500 851,900 Average dinner sale price - $40 Average lunch sale price - $20 Assume that the variable cost of preparing and serving dinner is also twice that of a lunch The restaurant serves twice as many lunches as dinners Assume - restaurant open for 305 days Revenues Cost of sales, all variable Gross profit Operating expenses Variable Fixed Administrative expenses, all fixed Net income 222,380 170,940 451,500 7,080 1. Compute the daily break-even volume in lunches and dinners for the restaurant Shortcut formulas: Break-even fixed expenses volume in units unit contribution margin - Break-even volume in sales fixed expenses contribution margin ISE 3004 Gross margin (which is also called gross profit) is the excess of sales over the cost of goods sold*. Gross Margin = $600,000-320,000 = $ 280,000 Income Statement Net Sales: $600,000 COGS: variable: $120,000 fixed: $200,000 Gross Profit (Margin) $280,000 Operating Expenses variable: $ 40,000 fixed: $150,000 Net Income $ 90,000 *Cost of goods sold is the cost of the merchandise that is acquired or manufactured and resold Contribution Margin is Net Sales minus the variable product costs and the variable period expenses. $600,000 Net Sales: COGS: variable: fixed: Operating Expenses variable: fixed: Previous slide Net Sales: $600,000 COGS: variable: $120,000 fixed: $200,000 Gross Profit (Margin) $280,000 Operating Expenses variable: $ 40,000 fixed: $150,000 Net Income $120,000 $200,000 $ 40,000 $150,000 $ 90,000 Contribution Margin= Contribution Margin Ratio is the Contribution Margin as a percentage of Net Sales. Contribution Margin Ratio = Average dinner sale price - $40 Income statement - La Brasserie restaurant Revenues $2,098,400 Average lunch sale price - $20 Cost of sales, all variable 1.246,500 Assume that the variable cost of preparing and Gross profit 851,900 serving dinner is also twice that of a lunch Operating expenses The restaurant serves twice as many lunches Variable 222,380 as dinners Fixed 170,940 Administrative expenses, all fixed 451,500 Assume - restaurant open for 305 days Net income $ 7,080 Hint: Find the contribution margin provided by the addition of 3 dinners and 6 lunches 2. Suppose that an extra annual advertising expenditure of $15,000 would increase the average daily volume by three dinners and six lunches, and that there is plenty of capacity to accommodate the extra business. Prepare an analysis for the management of La Brasserie, explaining whether this would be desirable