Gilmans Caf is a popular restaurant in a local tourist town. Sarah Gilman, who opened the restaurant five years ago, has seen it grow steadily. Currently, Gilmans is only open for dinner, but many of her regular customers have been asking Sarah to consider opening for lunch as well. Sarah has been talking to her accountant about the financial impact of the expanded services on the overall business. She knew that the caf did not make much money and she was concerned that the new business might be too risky. The accountant asked her for her best estimates on the impact of the new business on revenues and costs. She had been thinking about this for some time and estimates that revenues would grow by about 25 percent. Food costs would increase by about 40 percent and labor costs by about 20 percent. Her rent would not change, but utilities would increase by about 25 percent. Other costs would increase by 15 percent. The salary she pays herself as manager of the caf would not change. A few days later, her accountant stops by with the following estimated income statement assuming she adds the lunch business. Required : a-1. Prepare an income statement. a-2. Based on the financial impact, should Sarah open the caf for lunch? b. Are there other factors she should consider?

Complete this question by entering your answers in the tabs bel Reg A1 Req A2 Reg B Prepare an income statement. Dinner Service Only Gilman's Cafe Annual Income Statement Lunch and Dinner Service Sales revenue $ 873,000 Costs Food costs 294,000 Labor 264,000 Rent 92,000 Utilities 59,500 Other costs 42,320 Manager's Salary 88,000 Total costs $ 839,820 Operating profit (loss) 33,180 $ Complete this question by entering your answers in the tabs below. Reg A1 Reg A2 Reg B Based on the financial impact, should Sarah open the caf for lunch? Yes ONo plete question by your ers in the tabs below. Reg A1 Reg A2 Reg B Are there other factors she should consider? (Select all that apply.) Whether this will lead to customers switching from dinner to lunch. What other restaurants might do. Whether the longer opening hours might cause the restaurant to lose some of its appeal. Whether this will lead to enhancement of storage facilities. Whether the longer opening hours might cause the restaurant to recruit additional staff.