The

Swift FeastSwift Feast

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

$ 495 comma 000$495,000

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

$ 8.25$8.25.

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

$ 3.30$3.30.

The income tax rate is

3030%.

Target net income is

$ 138 comma 600$138,600.

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

$ 138 comma 600$138,600?

3. Compute net income if the number of customers is

160 comma 000160,000.

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 $

1,155,000

.

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

$ 138 comma 600$138,600?

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

Fixed costs

/

Contribution margin per customer

=

Customers needed to break even

/

=