Question
RapidMeal Co. has two restaurants that are open 24 hours per day.Fixed costs for the two restaurants together is $450,000 per year.Service varies form a
RapidMeal Co. has two restaurants that are open 24 hours per day.Fixed costs for the two restaurants together is $450,000 per year.Service varies form a cup of coffee to full meals.The average sales check for each customer is $8.00.The average cost of food and other variable costs for each customer is $3.20.The income tax rate is 30%.Target net income after taxes is $105,000.
1) Compute the total dollar sales needed to obtain the target net income.
2) How many sales checks are needed to earn the target net income?
Note: target income is after tax, but CVP analysis is based on the operating income before tax income (So, you first need to convert the given net income to operating income before tax. (i.e., pre-tax operating income - 30% of pre-tax operating income = net income).
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