Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Express Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $400,000 per year. Service

The

Express Meal

has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total

$400,000

per year. Service varies from a cup of coffee to full meals. The average sales check per customer is

$8.50.

The average cost of food and other variable costs for each customer is

$3.50.

The income tax rate is

30%.

Target net income is

$140,000.

Requirements

1. Compute the revenues needed to earn the target net income.

2. How many customers are needed to break even? To earn net income of

$140,000?

3. Compute net income if the number of customers is

150,000.

Requirement 1. Compute the revenues needed to earn the target net income.

Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income.

Revenues

-

Variable costs

-

Fixed costs

=

Target net income

1 Tax rate

The revenues needed to earn the target net income is

.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

13th Edition

8120335643, 136126634, 978-0136126638

More Books

Students also viewed these Accounting questions

Question

How does the EEOC interpret the national origin guidelines?

Answered: 1 week ago

Question

What is the purpose of the OFCCP?

Answered: 1 week ago