Questions Part 1:

- What are the total fixed costs for all 3 levels?

- What is the net loss BEFORE taxes at the $700k level?

- What is the net income AFTER taxes at the $700k level?

- What is the income tax expense at the $1.3million level?

Questions Part 2:

- The difference in revenue between$1,000,000 and $1,300,000 levels is $300,000. What is the difference in after-tax net income?

-Why is the difference in revenue between the levels more than the difference in the net income?

Problem 12 Barbara Collins is the manager of Shives, a fine dining restaurant, and is preparing next year's budget. She wants to examine three different levels of sales as follows: $700,000, $1,000,000, and $1,300,000. The following information upon which to make the calculations is provided. Food cost percentage: 45 percent Labor: Variable: 23 percent Fixed: $80,000 Other operating expenses: 8 percent Fixed charges: $100,000 Income taxes: 30 percent of pretax income