The local Japanese-style steakhouse expects sales to be $500,000 in January. The average restaurant bill is $50. Only 25% of restaurant bills are paid in cash, while 70% are paid with credit cards and 5% are paid with debit cards. The transaction fees charged by the credit and debit card issuers are as follows:
• Credit cards: $0.50 per transaction + 2% of the amount charged
• Debit cards: $0.22 per transaction + 0.05% of the amount charged
Requirements
a. How much of the total sales revenue is expected to be paid with cash?
b. How many customer transactions does the company expect in January?
c. How much of the total sales revenue is expected to be paid with credit cards?
d. How many customer transactions will be paid for by customers using credit cards?
e. When budgeting for January's operating expenses, how much should the restaurant expect to incur in credit card transaction fees?
f. How much of the total sales revenue is expected to be paid with debit cards?
g. How many customer transactions will be paid for by customers using debit cards?
h. When budgeting for January's operating expenses, how much should the restaurant expect to incur in debit card transaction fees?
i. How much money will be deposited in the restaurant's bank account during the month of January related to credit and debit card sales? Assume the credit and debit card issuers deposit the funds on the same day the transactions occur at the restaurant (there is no processing delay).