HB accounting

Problem 7 The Double A Inn, owned by Alex and Andy Roof, includes a forty-room lodging operation and coffee shop. The average annual revenue and variable expense figures for the past two years have been as follows: Rooms Coffee Shop waitinev Revenue $ 600,000$ 400,000 n n tarty Variable expenses 120,000 200,000 one wanted The fixed costs are as follows: Rooms department $50,000 Coffee shop 60,000 Overhead 300,000 Required: 1. Assuming the sales mix remains constant, calculate the following: scrapor cals a. The annual revenue at the breakeven point. b. Total net income when total revenue equals $1,200,000. (Assume an income tax of 20 percent.) c. The required level of annual revenue when net income is $200,000. (Assume there are no income taxes.) 2. Answer the same questions as Part 1, but assume the sales mix has changed to 75 per- cent/25 percent for rooms/coffee shop.