PB5. The owner of a restaurant is considering two alternatives to improve operating results. The first alternative reduces food costs from 42% to 37% by improved purchasing and reduced portions. No other changes. The second alternative also cuts food costs to 37% but also spends an additional $2,000 on advertising to increase food and beverage sales by 20%. Extra customers will cause costs to increase in these categories: $2,000 in wages, $800 in supplies, $200 in administrative, $300 in repairs and $100 in utilities. Prepare the alternative projections

	Current	Alternative I	Alternative II
Sales - Food	$40,000	$40,000
Sales - Beverage	10,000	10,000
Total Sales	$50,000	$50,000
Cost of Sales - Food	16,800
Cost of Sales - Beverage	3,000
Total Cost of Sales	$19,800
Gross Margin	$30,200
Operating Expenses
Wages	13,600
Supplies	4,000
Administrative & General	2,600
Advertising & Promo	1,800
Repair	900
Utilities	1,300
Depreciation	700
Interest	600
Total Expenses	$25,500
Operating Income Advise the owner on which alternative to select and why.	$4,700