Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you please help me answer this question? Question: Prepare a break-even chart for the current situation (increments of 2500 covers) Garden restaurant, which is

Can you please help me answer this question?

image text in transcribed

image text in transcribed

Question: Prepare a break-even chart for the current situation (increments of 2500 covers)

Garden restaurant, which is part of a four-star hotel, currently serve 8,000 covers per month The average spend is $ 25.00 of which $ 21.00 is for food and the rest for beverage. Food is costed to give a gross profit of 60% of sales, and beverage to give a 50% gross profit. Labour costs are $ 6.00 per cover, other variable costs are $ 2.00 per cover and fixed costs in total are $ 25,000 per month. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Average Spending per customer Average Spending for food Average spending for beverage Food Cost of Sales Beverage Cost of Sales Labour costs Other variable costs Fixed costs per month $25 $21 Average spending per customer - Average spending for food 40% of Sale 50% of Sale $6 per cover $2 per cover $25,000 per month Variable costs - Fixed costs - In an effort to improve profitability whilst maintaining the existing food and beverage cost per cover, management are considering two alternative proposals: 23 Proposal A To introduce a cover charge of $ 1.00 and to increase all menu prices. As a result - food average spend would be expected to increase by 5% - beverage average spend would be expected to increase by 10% The number of covers per month is expected to fall by 500 Labour and other costs would increase by 10% but fixed costs would remain unchanged. 15% Proposal B To change the style of service. This is expected to reduce the labour costs by per cover and reduce the fixed costs by 5% A reduction in menu prices should lead to the average food spend decreasing by However, due to improved service and lower menu prices it is expected that the number of covers will rise by 15% $ 2.00

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Interpreting Company Reports And Accounts

Authors: Geoffrey Holmes, Alan Sugden, Paul Gee

10th Edition

0273711415, 9780273711414

More Books

Students also viewed these Accounting questions

Question

consider your role and influences as a researcher;

Answered: 1 week ago