The condensed income statement of the Aria Hotel (AH) is as follows:

	revenue	Variable costs	Fixed costs	Department Income
room	5000000	1000000	500000	3500000
food	2000000	800000	500000	700000
communications	200000	100000	100000	(100000)
Gift Shop	400000	150000	100000	150000
Total department income				4250000
Other variable expenses*				950000
Other fixed costs**				2800000
Pretax income				500000
Income taxes				100000
Net income				400000

*Management fees and rent expense vary with rooms revenue.

**Includes depreciation of $800,000.

Compute the AHs weighted average CMR. Consider all variable costs.

AHs total revenues =

5000000+2000000+200000+400000= 7,600,000

AHs total variable costs =

1000000+800000+200000+150000+950000= 3,100,000

AHs total fixed costs =

AHs weighted average CMR (CMRw) =

7600000-3100000/ 7600000= 0.59

Compute the AHs breakeven point.

4000000/0.59= 6779661.02

If the AH desires to earn (net income) $500,000, what must its total food sales equal? (Assume the sales mix is constant).

Tax rate =

Ib (Pretax Income) =

Total sales =

Food sales =