ACCT 2006 Question 3.2 Vine Dining seats 80 and operates from 6pm until late fro

Question

ACCT 2006 Question 3.2 Vine Dining seats 80 and operates from 6pm until late from Tuesday to Sunday except in late February and early March where the restaurant is closed to allow all staff including Sophle and her family an annual holday for a total of 318 operating days. Generally, two sittings (that is, 160 people) can be served each day. The average spend per customer is $65 and variable costs per customer is $16.50. Fixed salaries and other overheads is $847,750 per annum Days open|No of Cust's Varlable Cost per customer 4,480 2,502 3,310 January February March April May June July August September October November December 28 21 21 27 28 27 28 28 27 28 27 28 $17 $17 3,986 3,722 3,131 3,575 4,250 3,698 4,104 $15 $15 $15 $15 $15 $19 $19 $17 $17 a) Based on annual averages, calculate I. Break-even point in units and dollars Il. Break-even point in units and dollars where a target profit of $1,100,000 is identified- assume an even split of revenue per month IlI. Break-even point in units and dollars where the target profit used in b is after tax. b) Based on monthly information, calculate . Break-even point in units and dollars ll. Break-even point in units and dollars where a target profit of $1,100,000 is identified Ili. Break-even point in units and dollars where the target profit used in b is after tax.

Explanation / Answer

CALCULATION OF REVENUE AND VARIABLE COST PER MONTH AND FOR WHOLE YEAR

VARIABLE

COST

BREAK EVEN PER UNIT FIXED COST/(SALES PRICE PER UNIT WHICH IS $65 -VARIABLE COST PER UNIT)

BREAK EVEN

DOLLORS FIXED COST/CONTRIBUTION MARGIN CONTRIBUTION MARGIN=

{(SALES-VARIABLE COST)/SALES } *100 OR

BREAK EVEN UNITS*SALES PRICE

RECIEPT FROM CUSTOMER

(NO. OF CUSTOMERS IN MONTH* RECIEPT PER CUSTOMER I.E. $65)

WE ASSUME THAT FIXED COST $847750 IS ATTRIBUTABLE TO EACH MONTH EQUALLY

SO PER MONTH FIXED COST 847750/12 = $70645.8333

Q 3.2 a (1) BREAK EVEN POINT IN UNITS AND DOLLORS ON BASIS OF AVERAGE SPEND PER CUST. OF 65 & VARIABLE COST OF 16.5

TOTAL NO OF CUSTOMERS

AVERAGE CUSTOMERS= 318 DAYS*160 = 50880

ACTUAL CUSTOMERS= 45245

BREAK EVEN POINT IN UNITS = FIXED COST/(SALES PRICE PER UNIT - VARIABLE COST PER UNIT)

= 847750/(65-16.5) = 17479.38 UNITS = 17480 CUSTOMERS

BREAK EVEN SALES (IN DOLLORS) = FIXEDCOST/ CONTRIBUTION MARGIN

CONTRIBUTION MARGIN = SALES - VARIABLE COST /SALES

                                             = (AVG. CUSTOMERS * 65 - AVG. CUSTOMERS * 16.5)/ AVG CUSTOMERS*65

                                             = (50880*65 - 50880*16.5)/ 50880*65

                                             = (3307200-839520)/3307200

                                             = 2467680/3307200 = .7461 or 74.615%

BREAK EVEN SALES = 847750/74.615% = $ 1136165.65

(2) IF TARGET PROFIT IS $ 1100000

CONTRIBUTION = 1100000+847750(FIX COST)= 1947750

CONTRIBUTION PER CUSTOMER= 1947750/45245(ACTUAL CUSTOMER) = $43.05

BREAK EVEN POINT = 847750/43.05 =19692.218 or 19692 customers

Break even sales = 19692*65 = $1279995

(C) THE TAX RATE IS NOT GIVEN

                 PARTICULARS                            RECIEPT

VARIABLE

COST

CONTRIBUTION                           FIXED COST VARIABLE COST PER CUSTOMER

BREAK EVEN PER UNIT FIXED COST/(SALES PRICE PER UNIT WHICH IS $65 -VARIABLE COST PER UNIT)

BREAK EVEN

DOLLORS FIXED COST/CONTRIBUTION MARGIN CONTRIBUTION MARGIN=

{(SALES-VARIABLE COST)/SALES } *100 OR

BREAK EVEN UNITS*SALES PRICE

RECIEPT FROM CUSTOMER

(NO. OF CUSTOMERS IN MONTH* RECIEPT PER CUSTOMER I.E. $65)

JAN 291200 76160 215040 70645.83 17 1472 (ROUNDED OFF) 70645.83/(215040/291200)=955661.25 FEB 162630 42534 120096 70645.83 17 1472 95661.25 MARCH 215150 56270 158880 70645.83 17 1472 95661.25 APRIL 260455 60105 200350 70645.83 15 1413 91845 (1413*65) MAY 259090 59790 199300 70645.83 15 1413 91845 JUNE 241930 55830 186100 70645.83 15 1413 91845 JUL 203515 46965 156550 70645.83 15 1413 91845 AUG 232375 53625 178750 70645.83 15 1413 91845 SEP 276250 80750 195500 70645.83 19 1536 99840 OCT 240370 70262 170108 70645.83 19 1536 99840 NOV 266760 69768 196992 70645.83 17 1472 95680 DEC 291200 76160 215040 70645.83 17 1472 95680 TOTAL 2940925 748219 2192706 847750 16.5

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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