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eves the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entre the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is propo he contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an ex estaurant that would increase fixed costs by $549,900. At the same time, he is proposing to change the sales mix to g.

eves the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entre the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is propo he contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an ex estaurant that would increase fixed costs by $549,900. At the same time, he is proposing to change the sales mix to g.

FINANCIAL ACCOUNTING
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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Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $549,900. At the same time, he is proposing to change the sales mix to the following. Appetizers Main entrees Desserts Beverages Appetizers Percent of Total Sales 25 % 25 % 10 % 40 % Total restaurant sales $ Main entrees Desserts Beverages Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $109.980. (Round intermediate calculations to 3 decimal places eg 10.251 and final answers to 0 decimal places, eg 2,510) $ S Contribution Margin Ratio L 50 % $ 10 % 50 % 80 % Sales from Each Product 1057500 317250 317250 126900 507600
Transcribed Image Text:Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $549,900. At the same time, he is proposing to change the sales mix to the following. Appetizers Main entrees Desserts Beverages Appetizers Percent of Total Sales 25 % 25 % 10 % 40 % Total restaurant sales $ Main entrees Desserts Beverages Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $109.980. (Round intermediate calculations to 3 decimal places eg 10.251 and final answers to 0 decimal places, eg 2,510) $ S Contribution Margin Ratio L 50 % $ 10 % 50 % 80 % Sales from Each Product 1057500 317250 317250 126900 507600
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