Larry and Moe operate a large restaurant in a busy downtown area of a large city. For breakfast and lunch, they generally have a line of customers waiting. Fire codes prevent them from adding additional seating. The contribution format income statement for the most recent week follows:

Sales (4,960 meals served) $123,008

VC 63, 984

CM $59,024

FC 25,000

NI $34,024

Larry wants to automate food delivery. There would be no more servers. Orders would be placed electronically on iPads located at each table. Food would arrive via an overhead railroad. Larry believes that the cost of this system would be $11,200 per week and it would reduce variable costs by $3.00 per person. He thinks that maybe prices could be increased as customers will enjoy the novel environment.

1. Prepare a contribution format income statement using Larrys predictions. Assume the price and the number of meals served stays the same.

2. Compute the price increase that would be required to achieve a target NI of $40,000 per week.