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Can you help me with this exercise please thank you MINICASE 3_1357 Adam Gibbs is the owner of Country Burger in a small town in
Can you help me with this exercise please thank you
MINICASE 3_1357 Adam Gibbs is the owner of Country Burger in a small town in rural Ontario. There are three specialty burgers on Country Burger's menu (price per burger shown in brackets); the Double Bacon Burger ($7.50), Double Beef Burger (58.40), and the Double Chicken Burger ($9.40). Adam personally inspects each burger and ensures that they are served heaping with toppings to meet customer expectations for an experience they cannot find at other restaurants. The Country Burger restaurant closes in the winter months when the number of tourists visiting town decreases significantly. Adam would like to know the minimum number of burgers she needs to sell in order to break even. He intends to use this information to determine how long he should continue to operate the restaurant into the fall season. The common fixed costs shown below can be avoided if Adam closes the restaurant; other fixed costs such as property taxes cannot be avoided and are therefore excluded from the analysis below. Below are the partial financial results of August, the most recent month of operations. Total Double Bacon Burger $5,775 Double Beef Burger $11,256 Double Chicken Burger $20,304 Sales $37,335 Variable expenses: 1,826 2,736 Chicken Ground beef Bacon Cheese Buns Other 1,368 208 98 268 1,826 2,736 1,386 688 542 1,600 236 176 654 244 268 678 Total variable cost $1.942 $3.802 $3,016 $8,760 $3,833 $7,454 $17,288 $28,575 Contribution margin Common fixed expenses Operating income $16,332 $12,243 Required: 1. Calculate the contribution margin for each burger sold at the Country Burger restaurant. 2. Determine the break-even point in units (round to whole units) required for Adam to cover all fixed costs, assuming the current sales mix and costs do not change. Prepare a break-even income statement. 3. Determine the break-even point in sales dollars. Calculate Country Burger's degree of operating leverage (DOL). 5. The following are Country Burgers' expected volume of burger sales: September, 4,800; October, 4,200; November, 3,600; December, 2,800. Assuming the same product mix and the same common fixed expenses as August, and that Adam requires a profit of at least $10,000, when should Adam close the restaurant for the seasonStep by Step Solution
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