The Swift Feast has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $450,000 per year. Service varies from a cup ofcoffee to full meals. The average sales check per customer is $8.00. The average cost of food and other variable costs for each customer is $3.20. The income tax rateis 30%. Target net income is $105,000.Requirements1. Compute the revenues needed to eam the target net income.2. How many customers are needed to break even? To eam net income of $105,000?3. Compute net income if the number of customers is 145,000.Requirement 1. Compute the revenues needed to eam the target net income.Using the equation method, select the basic formula used to compute the revenues needed to earn the target net income.

Answer 1) Equation Used: Revenue - Variable Cost - Fixed Cost = Target Net Income / (1 - Tax rate)…

Answered: The Swift Feast has two restaurants…

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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The Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cupm of coffee to full meals. The average sales check per customer is $8.75. The average cost of food and other variable costs for each customer is $3.50. The income tax rate is 36%. Target net income is $117,600 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 $117,600? 3. Compute net income if the number of customers is 170,000. Requirement 1. Compute the revenues needed to eam the target net income. Using the equation method, select the basic formula used to compute the revenues needed to eam the target net income. Target net income 1-Tax rate Revenues Variable costs Fixed costs 1,023,750 The revenues needed to earn the target net income is $ Requirement 2. How many customers are needed to break even? To earn net income of…
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