Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help! I keep getting this wrong. HW is attached below. Thanks. The Hillside Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern
Please help! I keep getting this wrong. HW is attached below. Thanks.
The Hillside Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Phil Weld, the manager of Hillside, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows. Percent of Total Sales 10 % 50 % 15 % 25 % Appetizers Main entrees Desserts Beverages Contribution Margin Ratio 80 % 25 % 70 % 80 % Phil is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $160,500. The company has fixed costs of $1,278,500 per year. Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) $ Total restaurant sales Appetizers Sales from Each Product $ $ Main entrees $ Desserts $ Beverages Phil believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $585,000. At the same time, he is proposing to change the sales mix to the following. Percent of Total Sales Appetizers Main entrees Desserts Beverages 25 25 10 40 % % % % Contribution Margin Ratio 80 10 70 80 % % % % Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 10.251 and final answers to 0 decimal places, e.g. 2,510.) Total restaurant sales $ Sales from Each Product $ Appetizers $ Main entrees $ Desserts $ Beverages Suppose that Phil reduces the selling price on entrees and increases fixed costs as proposed in part (b), but customers are not swayed by the marketing efforts and the sales mix remains what it was in part (a). Compute the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 10.251 and final answers to 0 decimal places, e.g. 2,510.) $ Total restaurant sales Appetizers Main entrees Desserts Beverages Sales from Each Product $ $ $ $Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started