Problem $9$

George Patel, the owner$/$operator of the Riverside, is interested in determining the level of sales necessary to realize a net income of $$550,000$ next year. He has compiled records on each department$$s sales and costs and assumes that the sales mix will be the same next year. The major department, the rooms department, had sales of $$2\mathrm{.}5$ million, and its contribution margin was $$1\mathrm{.}75$ million. The coffee shop had sales of $$750,000$ and variable costs of $$350,000.$ The restaurant had sales of $$1\mathrm{.}2$ million and variable costs of $$750,000.$ Mr$.$ Patel assumes that the fixed costs will be $$1\mathrm{.}2$ million.

Required:

Question $1$

What is the CMRw$?$

Question $2$

What is the required level of total sales to generate $$500,000$ net income? $($Assume that there are no income taxes.$)$

Question $3$

What is the required level of total sales to generate $$500,000$ net income if the income tax rate is $30$ percent?