The

Rapid MealRapid Meal

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

$ 450 comma 000$450,000

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

$ 8.00$8.00.

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

$ 3.20$3.20.

The income tax rate is

3030%.

Target net income is

$ 105 comma 000$105,000.

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

$ 105 comma 000$105,000?

3. Compute net income if the number of customers is

135 comma 000135,000.

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.

-

-

=

/

The revenues needed to earn the target net income is $

.

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

$ 105 comma 000$105,000?

Determine the formula that is used to compute how many customers are needed to break even, then compute the number of customers needed.

/

=

Customers needed to break even

/

=

Determine the formula that is used to compute how many customers are needed to earn net income of

$ 105 comma 000$105,000,

then compute the number of customers needed.

/

=

Customers needed to earn $105,000

/

=

Requirement 3. Compute net income if the number of customers is

135 comma 000135,000.

Determine the formula that is used to compute the net income when the number of customers is

135 comma 000135,000,

then compute the net income.

	+		=	Net income
	+		=