A restaurant budgets for overhead expenses of $430,000 and a profit of $65,000 based on sales of $780, 000. Using the overhead - contribution method, what should the restaurant charge for an entrée with a cost per portion $3.97? Round up to the nearest penny

A restaurant budgets for overhead expenses of $430,000 and a profit of $65,000 based on sales of $780, 000. Using the overhead - contribution method, what should the restaurant charge for an entrée with a cost per portion $3.97? Round up to the nearest penny

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

A restaurant budgets for overhead expenses of $430,000 and a profit of $65,000 based on sales of $780,000. Using the overhead - contribution method, what should the restaurant charge for an
entrée with a cost per portion $3.97? Round up to the nearest penny

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