The Cullumber Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Paul Weld, the manager of Cullumber, has determined that during the last $2$ years the sales mix and contribution margin ratio of its offerings are as follows. Sales mix is determined using total sales dollars.

Appetizers Main entrees Desserts Beverages

$15\%50\%50\%25\%10\%50\%25\%80\%$

Percent of Total Sales

Contribution Margin Ratio

Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $$98,280.$ The company has fixed costs of $$884,520$ per year.

$($a$)$

$!$

Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. $($Round intermediate calculations to $3$ decimal places e$.$g$.0\mathrm{.}251$ and final answers to $0$ decimal places, e$.$g$.2,510.)$

Your answer is correct.

Total restaurant sales

$ $$2,184,000$

Sales from Each Product

Appetizers $

$ $ $

$327,6001,092,000$ $$218,400$ $$546,000$

Main entrees Desserts Beverages

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Attempts: $1$ of $3$ used

$($b$)$

$"$

Your answer is incorrect.

Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to $10\%$ by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $$491,400.$ At the same time, he is proposing to change the sales mix to the following.

Appetizers Main entrees Desserts Beverages

$25\%50\%25\%10\%10\%50\%40\%80\%$

Percent of Total Sales

Contribution Margin Ratio

Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $$98,280.($Round intermediate calculations to $3$ decimal places e$.$g$.10\mathrm{.}251$ and final answers to $0$ decimal places, e$.$g$.2,510.)$

Total restaurant sales

$ $2,756,000$

Sales from Each Product

Appetizers $

$ $ $

$$413,4001,378,000$ $$275,600$ $$689,000$

Main entrees Desserts Beverages