Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Complete the below questions for the 4th quarter assuming you are closed. Some of the costs will still need to be paid. Determine if
Complete the below questions for the 4th quarter assuming you are closed. Some of the costs will still need to be paid. Determine if you should stay open or close for the 4th quarter. A quarter is 3 months. /20 marks Sales revenue 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Totals If 4th Closed Totals if 4th closed $115,000 40,250 $124,000 43,400 $89,400 $54,000 31,290 18,900 Cost of Sales Gross Margin Operating Expenses: Wages & Salaries Expense 34,500 37,200 26,820 16,200 Supplies Expense 1,900 2,200 1,970 1,200 Advertising Expense 900 900 900 $900 Utilities Expense 2,600 2,900 2,680 2,200 Maintenance Expense 450 450 400 400 Insurance expense 1,200 1,200 1,200 1,200 Interest Expense 750 750 750 750 Depreciation expense 700 700 700 700 Rent Expense 5,000 5,000 5,000 5,000 Total Operating Expenses Net Income Wages & Salaries Expense Supplies expense Advertising Expense Utilities Expense Maintenance Expense. Insurance expense Depreciation expense Interest Expense Rent Expense $3,500 is a fixed cost of key personnel who would be kept on the payroll even if the operation were closed for three months. Costs varies directly with sales revenue; none of the supplies costs are fixed Half of the quarterly Advertising cost is fixed; the rest of the cost is variable Even if closed for three months, the restaurant will still require some heating; this is estimated to cost $200 a month. Some light maintenance is required during the closed period with an estimated cost of $200 for the quarter. Insurance cost will be reduced 50% if closed for the three months. With less customer traffic and reduced wear and tear, there would be a 75% reduction in depreciation expense for the fourth quarter. Will still have to pay, even if it's closed for 3 months. This is an annual expense of $20,000 that MUST be paid, regardless of whether the restaurant is open or closed. Please provide at least two reasons with a rationale why you would either stay open, or close? Reason #1 Reason #2
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started