Question 1

A restaurant plans to begin operations with an investment of $450 000 in equipment by the

owner. The following information is available:

Sales revenue will be $600 000

Variable costs will be:

i. Food costs 35% of Sales revenue

ii. Wages 25% of Sales revenue

iii. Other variable costs will be 10% of sales revenue

Fixed costs are as follows:

i. Manager's salary and wages $44 000

ii. Insurance- $12 000

iii. Marketing- $9 600

iv. Rental -$14 000

v. Equipment depreciation 10%

A.

Calculate the break-even sales revenue.

B.

Calculate the level of sales the restaurant will have to achieve for the owner to obtain a

15% return on his investment.

C.

Construct a contribution margin income statement to verify the results of (B) above

NB. Please put in in table format so that i can understand the asnwers that are been provided