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

.