Financial management chapter 7

The Eastpointe Caf's average lunch sells for $12, while its variable costs per lunch average $8.00. It plans to advertise a Monday lunch special for $11. The special would cost Eastpointe $7.75 per meal (variable costs). An ad in the local paper to promote the special would cost Eastpointe $200 Required: 1. What are the cafe's contribution margin (CM) and contribution margin ratio (CMR) to begin with? 2. What are the CM and CMR based strictly on the lunch special-related price and cost? 3. How many lunch covers must be sold to cover the promotion of the luncheon special? The 100-room limited-service Pepper Inn has an ADR of $80 and variable costs per room sold of $15. Assume there is no other sales activity. Its monthly fixed costs total $100,000 Required: 1. How many rooms must be sold to break even? 2. What day of the month does it break even if it averages a paid occupancy percentage of 60 percent? Assume all 100 rooms are available for sale each day 3. If variable costs are reduced by $3 and fixed costs increase by $72,000 annually, what are the monthly breakeven revenues