Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Sandhill 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
image text in transcribed
The Sandhill inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Paul Weld, the manager of Sandhill, 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. 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 $114,660. The compary has fixed costs of $1,031,940 per year. 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 expansior of the restaurant that would increase fixed costs by $573,300. At the same time, he is proposing to change the sales mix to the following. Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $114,660. (Round intermediate calculations to 3 decimal places e.g. 10.251 and final answers to 0 decimal places, e.4. 2,510.) Sales from Each Product Appetizers $330750 $ 330750 Main entrees $ 330750 Desserts $ 132300 Beverages $ 529200

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

Basic Accounting Concepts Principles And Procedures Volume 1

Authors: Gregory Mostyn, Worthy And James

2nd Edition

0991423100, 978-0991423101

More Books

Students also viewed these Accounting questions

Question

Distinguish between short-term and long-term goals.

Answered: 1 week ago

Question

Why is interest in portable benefits in health care increasing?

Answered: 1 week ago