Peform a sensitivity analysis by answering the following questions:A. What is the break-even point in sales dollars for RBC?B. What is the margin of safety for RBC?C. What sales dollars would be required to achieve an operating profit of $170,000? $440,000? **Income Statement Analysis for RBC****Sales**- **Beer sales (40% of total sales):** $784,000- **Food sales (48% of total sales):** $940,800- **Other sales (12% of total sales):** $235,200**Total sales:** $1,960,000**Variable Costs**- **Beer (13% of beer sales):** $101,920- **Food (34% of food sales):** $319,872- **Other (30% of other sales):** $70,560- **Wages of employees (20% of sales):** $392,000- **Supplies (1% of sales):** $19,600- **Licenses:** $9,000- **Other, credit card, misc. (3% of sales):** $58,800**Total variable costs:** $1,066,752**Contribution Margin:** $899,248**Fixed Costs**- **Salaries: manager, chef, brewer:** $132,000- **Utilities:** $28,000- **Marketing:** $14,000- **Advertising:** $36,000- **Other: cleaning, menus, misc:** $18,000- **Insurance and accounting:** $34,000- **Property taxes:** $24,000- **Depreciation:** $88,000- **Debt service (interest on debt):** $127,000**Total fixed costs:** $478,000**Operating Profit:** $421,248---**Required Tasks:**Perform a sensitivity analysis by answering the following questions:a. What is the break-even point in sales dollars for RBC?b. What is the margin of safety for RBC?c. What sales dollars would be required to achieve an operating profit of $170,000? $440,000?This detailed breakdown provides insight into the financial structure and operational efficiency of RBC, showcasing the relationship between sales, variable costs, fixed costs, and operating profit. Understanding these components is crucial for strategic planning and financial decision-making. Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customers—food from the restaurant segment and freshly brewed beer from the beer production segment. Both segments are typically in the same building, which allows customers to see the beer-brewing process.After months of research, the owners created a financial model that showed the following projections for the first year of operations.**Projected Financials:**- **Sales:** - Beer sales: $784,000 - Food sales: $940,000 - Other sales: $235,200 - **Total sales:** $1,960,000- Less cost of sales: $492,352- **Gross margin:** $1,467,648- Less marketing and administrative expenses: $1,046,400- **Operating profit:** $421,248In the process of pursuing capital through private investors and financial institutions, RBC was approached with several questions. The following represents a sample of the more common questions asked:- What is the break-even point?- What sales dollars will be required to make $170,000? To make $440,000?- Is the product mix reasonable? (Beer tends to have a higher contribution margin ratio than food, and therefore product mix assumptions are critical to profit projections.)- What happens to operating profit if the product mix shifts?- How will changes in price affect operating profit?- How much does a pint of beer cost to produce?It became clear to the owners of RBC that the initial financial model was not adequate for answering these types of questions. After further research, RBC created another financial model that provided the following information for the first year of operations. (Note: No additional detailed information from the second financial model is provided in the text.)

Since you have asked multiple question, we will solve the first question for you. If you want any…

Sales Beer sales (40 of total sales) Food sales (48 of total sales) Other sales (124 of total sales) Total sales Variable Costa $784,000 940,800 235,200 $1,960,000 Beer (13 of beer sales) Food (34 of food sales) Other (30 of other sales) Mages of employees (204 ot sales) Supplies (1 of sales) Utilities (Ss of sales) Otheri eredit card, mise. (3 of sales) Total variable costs Contribution margin Tixed Costs Salariesi manager, chef, brever Maintenance Advertising Otheri eleaning, menus, nise Insurance and accounting Property taxes Depreciation Debt service (interest on debt) Total fixed costs Operating proftit $101,920 319,872 70,560 392,000 19,600 98,000 50,800 $1,060,752 $ 899,248 $132,000 28,000 18,000 36,000 34,000 15,000 ,000 127,000 470,000 421,248 Required: Perform a sensitivity analysis by answering the following questions: a. What is the break-even point in sales dollars for RBC? b. What is the margin of safety for RBC? c. Whet sales dollars would be required to achieve an operating profit of $170,000? $440,000?

Sales Beer sales (40 of total sales) Food sales (48 of total sales) Other sales (124 of total sales) Total sales Variable Costa $784,000 940,800 235,200 $1,960,000 Beer (13 of beer sales) Food (34 of food sales) Other (30 of other sales) Mages of employees (204 ot sales) Supplies (1 of sales) Utilities (Ss of sales) Otheri eredit card, mise. (3 of sales) Total variable costs Contribution margin Tixed Costs Salariesi manager, chef, brever Maintenance Advertising Otheri eleaning, menus, nise Insurance and accounting Property taxes Depreciation Debt service (interest on debt) Total fixed costs Operating proftit $101,920 319,872 70,560 392,000 19,600 98,000 50,800 $1,060,752 $ 899,248 $132,000 28,000 18,000 36,000 34,000 15,000 ,000 127,000 470,000 421,248 Required: Perform a sensitivity analysis by answering the following questions: a. What is the break-even point in sales dollars for RBC? b. What is the margin of safety for RBC? c. Whet sales dollars would be required to achieve an operating profit of $170,000? $440,000?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

If, Total Fixed cost OMR 32000, Selling price per unit OMR 20, and Variable cost per unit OMR 12. What will be the Margin of safety and profit if actual sales are OMR 85000? Select one: O a. Margin of Safety OMR 10000, Profit OMR 4000 O b. Margin of Safety OMR 26667, Profit OMR 16000 O c. None of the options O d. Margin of Safety OMR 5000, Profit OMR 2000
There are two questions, please find the answers
Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $15 Direct labor 10 Factory overhead $451,600 Selling expenses: Sales salaries and commissions 93,800 Advertising 31,800 Travel 7,100 Miscellaneous selling expense 7,800 Administrative expenses: Office and officers' salaries 91,700 Supplies 11,300 Miscellaneous administrative expense 10,500 Total $705,600 $42 It is expected that 10,800 units will be sold at a price of $140 a unit. Maximum sales within…
If, Total Fixed cost OMR 32000, Selling price per unit OMR 20, and Variable cost per unit OMR 12. What will be the Margin of safety and profit if actual sales are OMR 85000? Select one: O a. None of the options O b. Margin of Safety OMR 5000, Profit OMR 2000 c. Margin of Safety OMR 10000, Profit OMR 4000 O d. Margin of Safety OMR 26667, Profit OMR 16000
Now suppose that annual unit sales, variable cost, and unit price are equal to their respective expected values—that is, there is no uncertainty. Determine the company's annual profit for this scenario. Round answer to a whole number, if needed.$
XYZ Company wishes to gain more market share. In order to do that, the company is planning to double the current production and sales quantity. At the same time, the company plans to decrease the selling price per unit by half. Assuming that the total fixed cost and the variable cost per unit remain unchanged, what would be the effect on ?profit .Cannot be determined using the information in the question a O Profit would remain unchanged b O Profit would decrease .c O None of the given answers .d O Profit would increase e O
Calculating LIFO, FIFO, Income and Cash Flows An acquaintance has proposed the following business plan to you. A local company requires a consistent quantity of a commodity and is looking for a reliable supplier. You could become that reliable supplier. The cost of the commodity is expected to rise steadily over the foreseeable future, but the company is willing to pay more than the price that is current at the time. All you would need to do is make an investment, purchase the inventory and then deliver inventory to the company over the following year. One complication is that the commodity is available for purchase only seasonally, so at the end of every year you would need to purchase the supply for the following year. The customer pays promptly on delivery. An initial cash investment of $62,000 would be used to purchase $50,000 of inventory in December 2019. The remaining cash would be held for liquidity needs. In the following year, you would deliver this inventory to the customer.…
Q1) One of the industrial investors needed an analysis that would lead him to a break-even level between the following inputs and outputs: Fixed Cost = 180079 $ , Variable Costs =475, Revenue of saling prices per unit (204 $ ) Y of Products 890 ‘599‘ 917‘ eu‘ 955[ 975‘ sas[ 1,u7‘ 1,159' 1,193‘ 1,209‘ 1,255‘ Require A) Find all lines of anlysis . B) How the produaction reach to B.E.P. C) Based on the available information, show the level of variation from line of production to other annually.
Consider the following duopoly model and determine profit - maximizing output and price for q_1+ q 2 TC_1 = 10 q_(1) TC_2 = 10 q_2 each firm. P = 200 - Q Industry Demand Q =