Can someone help me understand this please?

Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customersfood from the restaurant segment and freshly brewed beer from the beer production segment. Both segments are typically in the same building, which allows customers to see the beer-brewing process.

After months of research, the owners created a financial model that showed the following projections for the first year of operations.

Sales
Beer sales	$	842,800
Food sales		940,800
Other sales		176,400
Total sales	$	1,960,000
Less cost of sales		461,776
Gross margin	$	1,498,224
Less marketing and administrative expenses		1,081,000
Operating profit	$	417,224

In the process of pursuing capital through private investors and financial institutions, RBC was approached with several questions. The following represents a sample of the more common questions asked:

• What is the break-even point?
• What sales dollars will be required to make $150,000? To make $540,000?
• Is the product mix reasonable? (Beer tends to have a higher contribution margin ratio than food, and therefore product mix assumptions are critical to profit projections.)
• What happens to operating profit if the product mix shifts?
• How will changes in price affect operating profit?
• How much does a pint of beer cost to produce?

It became clear to the owners of RBC that the initial financial model was not adequate for answering these types of questions. After further research, RBC created another financial model that provided the following information for the first year of operations.

Sales
Beer sales (43% of total sales)	$	842,800
Food sales (48% of total sales)		940,800
Other sales (9% of total sales)		176,400
Total sales				$	1,960,000
Variable Costs
Beer (13% of beer sales)	$	109,564
Food (32% of food sales)		301,056
Other (29% of other sales)		51,156
Wages of employees (24% of sales)		470,400
Supplies (1% of sales)		19,600
Utilities (3% of sales)		58,800
Other: credit card, misc. (2% of sales)		39,200
Total variable costs				$	1,049,776
Contribution margin				$	910,224
Fixed Costs
Salaries: manager, chef, brewer	$	139,000
Maintenance		25,000
Advertising		16,000
Other: cleaning, menus, misc		38,000
Insurance and accounting		33,000
Property taxes		21,000
Depreciation		92,000
Debt service (interest on debt)		129,000
Total fixed costs				$	493,000
Operating profit				$	417,224

Required:

Perform a sensitivity analysis by answering the following questions:

a. What is the break-even point in sales dollars for RBC?

b. What is the margin of safety for RBC?

c. What sales dollars would be required to achieve an operating profit of $150,000? $540,000?