Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range, Paul Weld, the manager of

image text in transcribed
image text in transcribed
The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range, Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows: Percent of Total Sales 15 % 5096 Appetizers Main entrees Desserts Beverages Contribution Margin Ratio 80 90 25% 60 % 80 9 1090 25 26 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 $111.000. The company has fixed costs of $1,196,950 per year. Question 4 of 6 0.33/1 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 $585,700. At the same time, he is proposing to change the sales mix to the following Appetizers Main entrees Desserts Beverages Percent of Total Sales 25 % 25 % 10 % 40 Contribution Margin Ratio 8096 10 % 60 % 80 % Compute 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 es 10.251 and final answers to 0 decimal places, es 2,510.3 Total restaurant sales 5 Sales from Each Product $ Appetizers Maintrees 5 Desserts B R T

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

Audit Guide Government Auditing Standards And Single Audits

Authors: AICPA

1st Edition

1945498447, 978-1945498442

More Books

Students also viewed these Accounting questions

Question

10. Describe the relationship between communication and power.

Answered: 1 week ago