The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwest

Question

The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows. Appetizers Main entrees Desserts Beverages Percent of Total Sales 15% 50% 10% 25 % Contribution Margin Ratio 60% 25% 70% 80% 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 $ 120,000. The company has fixed costs of $1,262,250 per yean Your answer is correct. Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places eg. 0.251 and final answers to O decimal places, eg. 2,510.) Total restaurant sales 2850000 Sales from Each Product Appetizers 427500 Main entrees 1425000 Desserts 285000 Beverages 712500 Attempts: 1 of 4 used

Explanation / Answer

Weighted average contribution margin ratio = (25%*60%)+(25%*10%)+(10%*70%)+(40%*80%)= 56.5% Revised fixed costs = 1262250+583950= $1846200 Solution to required question: Total restaurant sales = (1846200+120000)/56.5%= $3480000 Appetizers = 3480000*25%= $870000 Main entrees= 3480000*25%= $870000 Desserts= 3480000*10%= $348000 Beverages= 3480000*40%= $1392000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.