Do problem 3, a through c 142 Chapter 4calendar yeara substantial reduction in revenue. In June (the restaurant operates on a[January-December] budget), the owner reforecasted revenues down to $1,100,000.What will be the fixed costs under the new budget?b. Assuming the owner wants to maintain the original "bottom line" profit (income[profit] before taxes) of $70,000, how much in revenues will remain to be spent on vari-able costs?a.c. Assuming the owner is willing to break even on the restaurant's operation, how muchin revenues will remain to be spent on variable costs?Problem 4The Blue Ridge Café's budget for next year indicates the following:Revenues$765,000Total fixed costsTotal variable costsTotal CostsNet income before tax$ 91,000$512,000$603,000$162,000Revenue estimates assume 89,470 guests will be served.a. What is the guest check average?b. What are the variable costs per guests?c. How many guests must be served for the Blue Ridge Café to break even?d. If the owner needed a net income of at least $114,000, how many guests would need tobe served?e. How many more guests are needed to generate a net income of $114,000 than areneeded to break even?f. If the Blue Ridge Café decides to close during two months that traditionally generateslow business, it will lose about 18,000 guests. If the owner chooses to do this, whatwill be the new net income or loss?g. The manager is considering a kitchen renovation that will add $7,500 in new fixedbe if it does this during the first year that it closes for two months? (See Question Fcosts (depreciation and interest) each year. How much will the café's net income (loss)above.)h. The Blue Ridge Café closes for two months (Question F), incurs the additional fixedcosts (Question G), and is the "victim" of a problem in the economy that results in a14-percent increase in variable costs. How many additional guests are needed for it tomaintain its net income level (Question G)? c. WThe manager of the Spartan Land Restaurant is developing the operating budget for nextyear using the following financial information from the current year:ItemFood revenueBeverage revenueFood costBeverage costLabor (including benefits)Other operating costsFixed costsFood revenueFood costCurrent Year'sAmountPayrollPayroll taxes/benefitsDirect operating expensesEntertainmentAdvertisingUtilitiesa. What is the current year's budgeted profit (loss)?b. Develop next year's budget: indicate the profit (loss).Problem 2Administrative/generalRepairs/maintenanceRentReal estate/property taxesInsuranceInterest expense$973,000$112,500Problem 3Assume the approved food operations budget for the Hilotown Restaurant for 20X1 is asfollows:36%23%$298,00016%$70,000Next Year's PercentageIncrease (Decrease)DepreciationIncome (profit) before taxes4%2%1%(1%)(2%)samesame$1,400,000434,000364,00042,000112,00014,00042,00070,00056,00014,00070,00028,00014,00042,00028,00070,000Next Year'sAmount ($)% of Revenue100312638135415213 20115Unforeseen problems beyond the control of the owner (ongoing terrorism alerts thathave

Variable Cost :— It is the cost that changes with change in units. Variable cost per unit is…

Problem 3 Assume the approved food operations budget for the Hilotown Restaurant for 20X1 is as follows: Food revenue Food cost Payroll Payroll taxes/benefits Direct operating expenses Entertainment Advertising Utilities Administrative/general Repairs/maintenance Rent Real estate/property taxes Insurance Interest expense Depreciation Income (profit) before taxes $ 1,400,000 434,000 364,000 42,000 112,000 14,000 42,000 70,000 56,000 14,000 70,000 28,000 14,000 42,000 28,000 70,000 % of Revenue 100 31 26 3 8 1 3 5 4 1 5 2 N132|5O|| Unforeseen problems beyond the control of the owner (ongoing terrorism alerts tha have significantly reduced the tourist travel on which the restaurant relies) have caused

Problem 3 Assume the approved food operations budget for the Hilotown Restaurant for 20X1 is as follows: Food revenue Food cost Payroll Payroll taxes/benefits Direct operating expenses Entertainment Advertising Utilities Administrative/general Repairs/maintenance Rent Real estate/property taxes Insurance Interest expense Depreciation Income (profit) before taxes $ 1,400,000 434,000 364,000 42,000 112,000 14,000 42,000 70,000 56,000 14,000 70,000 28,000 14,000 42,000 28,000 70,000 % of Revenue 100 31 26 3 8 1 3 5 4 1 5 2 N132|5O|| Unforeseen problems beyond the control of the owner (ongoing terrorism alerts tha have significantly reduced the tourist travel on which the restaurant relies) have caused

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 1PB

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