The Green Valley Restaurant has three operating departments: Café, Bar, and Catering. The new General Manager Henderson wants to know what the level of sales is needed to achieve a 30% Return on Investment of $8,000,000, The information of Operating of 2020 is as follows: Total Revenue $2,500,000 Café 60% of Total Revenue; a CMR of 0.67 Bar 16% of Total Revenue; a CMR of 0.80 Catering Catering generates the remaining revenue; CMR of 0.72 Fixed cost $1,000,000 Tax Rate 30% 1. What is the Average Weighted Contribution Margin Ratio (CMRW. 2. What is the Required Revenue for the Green Valley Restaurant?

The Green Valley Restaurant has three operating departments: Café, Bar, and Catering. The new General Manager Henderson wants to know what the level of sales is needed to achieve a 30% Return on Investment of $8,000,000, The information of Operating of 2020 is as follows: Total Revenue $2,500,000 Café 60% of Total Revenue; a CMR of 0.67 Bar 16% of Total Revenue; a CMR of 0.80 Catering Catering generates the remaining revenue; CMR of 0.72 Fixed cost $1,000,000 Tax Rate 30% 1. What is the Average Weighted Contribution Margin Ratio (CMRW. 2. What is the Required Revenue for the Green Valley Restaurant?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

See similar textbooks

Similar questions

Calico Restaurants is planning to create a new online meals-to-order service and has estimated that creating it will have the following effects on its operations: a. Annual revenues will increase from $800,000/year to $1,300,000/year, for the next 3 years. b. While the restaurant earns an EBITDA margin (EBITDA as percent of sales) of 30% currently, it expects to earn an EBITDA margin of 40% on just its incremental online sales. c. The tax rate is 20% and the appropriate cost of capital for online restaurant businesses is 12%. Assuming that there will be an initial cost of $450,000 for creating the service, which will be depreciated straight line over 3 years to a salvage value of zero, estimate the NPV for the investment. a. 112,365 b. 9,865 C. -2,354 d. 6,348
An organization's objective is to increase its production by 20 percent next year. How do you consider the Accounting Department of the company? Line or staff? Justify your answer.
The president is considering a proposals prepared by members of his staff. For next year, the sales manager would to increase the unit selling price by 20%, increase the sales commission by 9%, and increase advertising by $100,00. Basaed on marketing studies, he is confident this would increase unit sales by one third. What profits would be under the sales manager's proposal? include both Total and Per Unit columns.
The CEO of Grace Company, Nicole Grace is debating an investment. The investment is projected to earn $20,000 annually and will require the company to acquire $100,000 in assets. The following chart summarizes Grace’s decision: Before Investment After Investment Operating income 75,000 95,000 Average operating assets 300,000 400,000 Required: Assume Grace is evaluated based on growth in the company’s ROI. Compute the Return on Investment for the company before and after the investment. Would you recommend Grace make the investment? Assume Grace is evaluated based on growth in the company’s residual income. The company’s required rate of return is 15%. Compute the company’s residual income before and after the investment. Would you recommend Grace make the investment?
The CEO of Grace Company, Nicole Grace is debating an investment. The investment is projected to earn $20,000 annually and will require the company to acquire $100,000 in assets. The following chart summarizes Grace’s decision: Before Investment After Investment Operating income 75,000 95,000 Average operating assets 300,000 400,000 Required: Assume Grace is evaluated based on growth in the company’s ROI. Compute the Return on Investment for the company before and after the investment. Would you recommend Grace make the investment? Assume Grace is evaluated based on growth in the company’s residual income. The company’s required rate of return is 15%. Compute the company’s residual income before and after the investment. Would you recommend Grace make the investment? Give at least one advantage and one disadvantage of using measures like ROI and residual income to evaluate company performance.
There is a company running a subscription-based business. A marketing manager of this company found that a customer of the company is expected to, on average, generate $200 of gross contribution per year and the retention rate of the customer is, on average, 85% per year. With 5% of annual discount factor and $500 of acquisition costs per customer, a customer's LTV for the entire life-time is about $230 $350 $500 $450 $850
Western Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Western Repair Shop's margin of safety as a percentage of target sales. 3. What is Western Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16%? Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. Target sales in dollars Margin of safety in dollars The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.) Break-even sales in dollars =
Database Systems is considering expansion into a new product line. Assets to support expansion will cost $500,000. It is estimated that Database can generate $1,990,000 in annual sales, with an 7 percent profit margin. What would net income and return on assets (investment) be for the year?
A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $70,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $46,000. (1) Compute the expected return on investment for each location. (2) Using return on investment, which location (A or B) should the company open? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the expected return on investment for each location. Location A Location B Numerator Return on Investment Denominator ROI Required 2 >
A growing chain is trying to decide which store location to open. The first location (A) requires a $500,000 investment in average assets and is expected to yield annual income of $70,000. The second location (B) requires a $200,000 investment in average assets and is expected to yield annual income of $40,000. (1) Compute the expected return on investment for each location. (2) Using return on investment, which location (A or B) should the company open? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the expected return on investment for each location. Location A Location B Return on Investment Numerator Denominator ROI
The company had an overall return on investment (ROI) of 15% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $1,000,000. The cost and revenue characteristics of the new product line per year would be: Sales $2,000,000 Variable expenses 60% of sales Fixed expenses $640,000 Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? Explain. 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product…
Marcia curtis is the vice president of development for Tamales to go a rapidly expanding chain of resturant featuring take tamales and other mexican food specialties. Currently, the chain has 150 units and average unit volume is $800,000 per year. Annual per-unit revenue growth for opened units is 5 percent per year. Tonya Gonzalez, the chain's president, has promised company stockholders the chain will experience 12 percent overall reveue growth in the next year. Assuming that per-unit growth on existing units continues to average 5 percent, calculate how many total operating units Marcia will need to have open next year to meet Tonya's goal of a 12 percent overall increase in the chain's revenue. Total Revenue-$120,000,000 Per Unit Revenue-$800,000 Total Number of Units- 150