Question 3

A restaurant with an average cheque of $700 per guest has the following average quarterly figures.

Sales revenue $5,000,000

Variable cost $2,700,000

Fixed cost $1,200,000

Required:

a) Calculate the breakeven sales revenue

b) Calculate the breakeven sales units

c) If actual sales revenue were $4,000,000 what would the restaurant operating income be? How many guests would this require?

d) What sale revenue must be achieved to provide $1,700,000 Net Income after tax in the upcoming quarter, assuming a tax rate of 35%?

Prepare a contribution margin income statement to confirm the calculated required sales return.