P6 please help..... Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number ofclients that it serves. It would then more heavily market its appetizers and beverages. He is proposing to reduce the contribution margin ratio on themain entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $585,000.At the same time, he is proposing to change the sales mix to the following.Percent ofTotal SalesContributionMargin RatioAppetizers25%70%Main entrees25 %10 %Desserts10 %Beverages40 %80 %80 %Compute the total restaurant sales, and the sales of each product line that would be necessary to achieve the desired target net income. (Roundintermediate calculations to 3 decimal places e.g. 10.251 and final answers to 0 decimal places, e.g. 2,510.)Total restaurant salesAppetizersMain entreesDessertsBeverages$Sales from Each Product

1. Contribution Margin Ratio for Each Product:- Appetizers: 70%- Main entrees: 10%- Desserts: 80%-…

Answered: Paul believes the restaurant could…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 5PA: Kylies Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase...

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Kylies Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $59. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesnt increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.
Chan’s Spring Roll (CSR), a seller of frozen spring roll, is considering introducing a healthier version of its product that will be low in sugar and gluten-free. The firm expects that sales of the new spring roll will be $20 million per year. While many of these sales will be to new customers, CSR estimates that 50% will come from customers who switch to the new, healthier spring roll instead of buying the original version. Suppose that 25% of the customers who would switch from CSR’s original spring roll to its healthier version will switch to another brand if CSR does not introduce a healthier spring roll. What level of incremental sales is associated with introducing the new spring roll in this case? $15 million $10 million $17.5 million $12.5 million
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The Isis Company considers introducing a new lower-end olive oil brand with cheaper packaging in addition to its original brand "Isis". The objective was to increase the company's market share by penetrating the mass market (Isis's current market share in 2020 is 10%). Management wanted to position the two brands very differently. However, they anticipated that the new brand might cannibalize from Isis. The below table summarizes the prices, costs and expected volumes in both scenarios (Isis alone and Isis + New Brand) next year (2021). 2021 Scenario 1 Isis 50 20 Volume (units) Fixed Costs (EGP) 100,000 500,000 90,000 500,000 a) Conduct a cannibalization analysis to evaluate the introduction of the new brand. Next year (2021) Price (EGP/unit) Var. Cost (EGP/unit) 2022 Price (EGP/unit) Var. Cost (EGP/unit) b) What is the % increase (or decrease) in volume and in net profits if the new brand is introduced? What is the new market share of the Isis Company (Isis+ New Brand) in this case…
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Expando, Inc. is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $5 million. If demand for new products is low, the company expects to receive $10 million in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $12 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $10 million. Were demand to be low, the company would expect $13 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $16 million. In either case, the probability of demand being high is 0.70, and the probability of it being low is 0.30. Not constructing a new factory would result in no additional revenue being generated because…

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