The Express Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $400,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.50. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 30%. Target net income is $140,000. Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break even? To earn net income of $140,000? 3. Compute net income if the number of customers is 150,000. Requirement 1. Compute the revenues needed to earn the target net income. Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income. Variable costs Fixed costs = Target net income + 1-Tax rate $ Revenues The revenues needed to earn the target net income is $ 1,020,000 Requirement 2. How many customers are needed to break even? To earn net income of $140,000? Determine the formula that is used to compute how many customers are needed to break even, then compute the number of customers needed. Contribution margin per customer = Customers needed to break even 5.00 80,000 $ Fixed costs 400,000 $. Determine the formula that is used to compute how many customers are needed to earn net income of $140,000, then compute the number of customers needed. Sales check per customer 8.50 Customers needed to earn $140,000 120,000 - Total revenues 1,016,949 Requirement 3. Compute net income if the number of customers is 150,000. Determine the formula that is used to compute the net income when the number of customers is 150,000, then compute the net income. Net income +

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Only typed solution

The Express Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $400,000 per year. Service varies from a cup of coffee to full meals. The average
sales check per customer is $8.50. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 30%. Target net income is $140,000.
Requirements
1. Compute the revenues needed to earn the target net income.
2. How many customers are needed to break even? To earn net income of $140,000?
3. Compute net income if the number of customers is 150,000.
Requirement 1. Compute the revenues needed to earn the target net income.
Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income.
Variable costs
Fixed costs
= Target net income
1- Tax rate
$
Revenues
The revenues needed to earn the target net income is
$ 1,020,000
Requirement 2. How many customers are needed to break even? To earn net income of $140,000?
Determine the formula that is used to compute how many customers are needed to break even, then compute the number of customers needed.
$
Fixed costs
400,000
Total revenues
1,016,949
$
Determine the formula that is used to compute how many customers are needed to earn net income of $140,000, then compute the number of customers needed.
= Customers needed to earn $140,000
Sales check per customer
8.50
120,000
+
+
+
www
+
Contribution margin per customer Customers needed to break even
5.00
80,000
+$
Requirement 3. Compute net income if the number of customers is 150,000.
Determine the formula that is used to compute the net income when the number of customers is 150,000, then compute the net income.
Net income
=
Transcribed Image Text:The Express Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $400,000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $8.50. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 30%. Target net income is $140,000. Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break even? To earn net income of $140,000? 3. Compute net income if the number of customers is 150,000. Requirement 1. Compute the revenues needed to earn the target net income. Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income. Variable costs Fixed costs = Target net income 1- Tax rate $ Revenues The revenues needed to earn the target net income is $ 1,020,000 Requirement 2. How many customers are needed to break even? To earn net income of $140,000? Determine the formula that is used to compute how many customers are needed to break even, then compute the number of customers needed. $ Fixed costs 400,000 Total revenues 1,016,949 $ Determine the formula that is used to compute how many customers are needed to earn net income of $140,000, then compute the number of customers needed. = Customers needed to earn $140,000 Sales check per customer 8.50 120,000 + + + www + Contribution margin per customer Customers needed to break even 5.00 80,000 +$ Requirement 3. Compute net income if the number of customers is 150,000. Determine the formula that is used to compute the net income when the number of customers is 150,000, then compute the net income. Net income =
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education