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? SalesBeer sales (40% of total sales)Food sales (48% of total sales)Other sales (128 of total sales)$784,000940,800235,200Total sales$1,960,000Variable CostsBeer (134 of beer sales)Food (34 of food sales)Other (30% of other sales)Wages of employees (204 of sales)Supplies (19 of sales)Utilities (5% of sales)Otheri credit card, misc. (3 of sales)Total variable costsContribution marginFixed Costs$101,920319,87270,560392,00019,60098,00058,800$1,060,752$ 899,248Salariesi manager, chef, brewerMaintenanceAdvertisingOtheri cleaning, menus, miseInsurance and accountingProperty taxesDepreciationDebt serviee (interest on debt)Total fixed costs$132,00028,00018,00036,00034,00015,00088,000127,000478,000Operating profit421,248Required: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? Three entrepreneurs were looking to start a new brewpub near Sacramento, Californla, called Roseville Brewing Company (RBC).Brewpubs provide two products to customers-food from the restaurant segment and freshly brewed beer from the beer productionsegment. 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.SalesBeer sales$784,000940,800235,200$1,960,000492,352$1,467,6481,046,400Food salesOther salesTotal salesLess cost of salesGroas marginLess marketing and administrative expensesOperating profit421,248In the process of pursuing capital through private investors and financial institutions, RBC was approached with several questions. Thefollowing 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 mixassumptions 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 theseltypes of questions. Afterfurther research, RBC created another financial model that provided the following information for the first year of operations.

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

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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. Sales Beer sales $ 781,200 Food sales 1,074,150 Other sales 97,650 Total sales $ 1,953,000 Less cost of sales 525,358 Gross margin $ 1,427,642 Less marketing and administrative expenses 1,125,430 Operating profit $ 302,212 In 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…
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