Sid Gull, the owner operator of the Iowa Inn is interested in determining the level of sales necessary to realize a net income of $500,000 next year. He has compiled records on each departments sales and costs and assumes that the sales mix will be the same next year. The major department, the rooms department, had sales of $2,500,000 and its contribution margin was $1,750,000. The coffee shop had sales of $750,000 and variable costs of $300,000. The restaurant had sales of $1,200,000 and variable costs of $750,000. Mr. Gull assumes that the fixed costs will be $1,000,000.

1. What is the CMR?
2. What is the required level of total sales to generate $500,000 net income? (assume that there are no income taxes)
3. What is the requires level of total sales to generate $500,000 net income if the income rate is 30%?