You are opening a new restaurant and need to determine the revenue required to generate your desired profit level. Use the information provided below to calculate the required information, then analyze your results. Refer to Textbook Page 133 for calculations.

ASSIGNMENT GUIDELINES

Assume the following data has been obtained from your operation's budget:
Total Annual Revenues = $521,000
Total Annual Fixed Costs = $49,000
Total Annual Variable Costs = $418,000
Total Annual Costs = $467,000
Total Net Income Before Taxes = $54,000
Number of Guests Used to Estimate Budgeted Revenues = 57,000

Calculate the following problems:
Guest Check Average
Variable Cost per Guest
Number of Guests Served at Breakeven Point
Number of Guests Served at Desired Net Income Level of $75,000
Number of Additional Guests Needed Because of New Fixed Costs (Assume $3,500 Increase in Fixed Costs)
Total Number of Guests Needed Due to Additional Variable Costs (Assume 10% increase in Variable Costs)

Answer the follow-up questions below.

Be sure to include the following in your submission:


Formula & Answer (in dollars) for Guest Check Average
Formula & Answer (in dollars) for Variable Cost per Guest
Formula & Answer (in guests) for Number of Guests Served at Breakeven Point
Formula & Answer (in guests) for Number of Guests Served at Desired Net Income Level of $75,000
Formula & Answer (in guests) for Number of Additional Guests Needed Because of $3,500 New Fixed Costs
Formula & Answer (in guests) for Total Number of Guests Needed Due to Additional 10% Variable Costs
Based on your calculations, why would you recommend to the manager that they strive to keep variable costs within the budgeted amount?