Nathan and Cody notice there is stiff competition in the food cart and food truck industries and therefore are considering opening a traditional restaurant. Opening a restaurant would have many advantages and disadvantages, the company can expect fixed costs to increase by $125,000 a year to cover rent, equipment, furniture, salaries and other costs.

Sales	$217,875.00
Variable costs	46,687.50
Contribution margin	171,187.50
Fixed costs	90,000.00
Income before taxes	81,187.50
Income taxes (32% rate)	25,980.00
Net income	$ 55,207.50

This alternative would allow GT to increase their plate prices to $14.50 and would increase the variable cost per unit by $2.50. Assume plate sales remain at 31,125.

Assume that the company expects sales to decline by 20% next year. There will be no change in plate price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two types (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings).

ANSWER SHOULD BE TOTAL SALES $361,050 AND NET INCOME OF $31,586