FRESH PRESS LTD. Fresh Press LTD. is a hamburger chain with operations across North America. The company operates using a typical fast food operations, however is considering adding food trucks in order to increase business. Below is the CVP Income statement for Fresh Press for the 1st quarter of 2020. Fresh Press LTD. CVP Income Statement For the Quarter Ended March 31, 2020 Sales Revenue ($5.00 per burger) Less Variable Expenses: Cost of Goods Sold Sales & Marketing Expenses General & Administrative Expenses Contribution Margin Less Fixed Expenses: Sales & Marketing Expenses General & Administrative Expenses Operating Income $5,098,500 $3,104,500 557,000 157,600 3,819,100 $1,279,400 $370,000 277,200 647,200 $632,200 Fresh Press wants would like to remain using the same supplier for its meat; however, the J.K. farms is increasing its prices by $1/pound of meat. Each pound of meat makes 4 burgers (Hint: You will need to convert price per pound of meat to price per individual burger.) Due to recent growth, Fresh Press has decided to hire a new head chef that would cost the company $25,000 per quarter for the new position's salary, as well additional kitchen space for an annual rent of $100,000 per year. Fresh Press believes that it can reduce variable marketing expenses by $0.10 per burger by increasing fixed marketing expenses by $45,500. With this new marketing scheme, the company believes it can generate a 5% increase in sales volume all the while keeping the price of each burger at $5.00. The company wants to put these changes into place by the third quarter of 2020; however, it needs to answer a few questions internally before it decides to move forward. 2. Based on the new cost structure, how many burgers would Fresh Press need to sell to maintain an operating profit of $632,200? Round the answer up to the next whole number. 4. Another option for Fresh Press is to expand to another city under its current operating model of only selling one kind of burger. In order to expand to another city, Fresh Press has decided that it will need to invest in an aggressive marketing campaign in the new city. The marketing campaign will cause another $425,000 in fixed marketing expenses to be incurred for the 1st quarter 2020. The company will also need to hire a new manager to run the new city's operations at a quarterly salary cost of $35,500. Fresh Press LTD. CVP Income Statement For the Quarter Ended March 31, 2020 Sales Revenue ($5.50 per burger) City A $5,098,500 City B $2,475,000 Total $7,573,500 Less Variable Expenses: Cost of Goods Sold $3,104,500 $1,507,500 $4,612,000 Marketing Expenses 557,000 270,000 827,000 General & Administrative Expenses Contribution Margin 157,600 $1,279,400 76,500 $621,000 234,100 $1,900,400 a. Based on this above information related to the possible expansion of the company, what is the impact to operating income as compared to the original Income Statement given on Page 1? b. What is the new breakeven in sales dollars? c. Fresh Press would like to ultimately have a total target profit of $1,000,000. How many burgers must it sell to meet this target profit? Note: Round burgers up to the whole burger.