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 $666,900. At the same time, he is proposing to change the sales mix to the following. Percent of Total Sales Contribution Margin Ratio Appetizers 25 % 50 % Main entrees 25 % 10 % Desserts 10 % 50% Beverages 40 % 80 % Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $133,380. (Round intermediate calculations to 4 decimal places e.g. 0.2514 and final answers to O decimal places, e.g. 2,510.) Total restaurant sales $ Appetizers $ Main entrees $ Desserts $ $ Beverages Sales from Each Product
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 $666,900. At the same time, he is proposing to change the sales mix to the following. Percent of Total Sales Contribution Margin Ratio Appetizers 25 % 50 % Main entrees 25 % 10 % Desserts 10 % 50% Beverages 40 % 80 % Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income $133,380. (Round intermediate calculations to 4 decimal places e.g. 0.2514 and final answers to O decimal places, e.g. 2,510.) Total restaurant sales $ Appetizers $ Main entrees $ Desserts $ $ Beverages Sales from Each Product
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $666,900. At the same time, he is proposing to change the sales mix to the
following.
Percent of
Total Sales
Contribution
Margin Ratio
Appetizers
25 %
50 %
Main entrees
25 %
10 %
Desserts
10 %
50%
Beverages
40 %
80 %
Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net
income $133,380. (Round intermediate calculations to 4 decimal places e.g. 0.2514 and final answers to O decimal
places, e.g. 2,510.)
Total restaurant sales
$
Appetizers
$
Main entrees
$
Desserts
$
$
Beverages
Sales from Each Product
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