Grades for Lauren Sayre xVrl WileyPLUS CSecure httpsedugenwi

?Grades for Lauren Sayre xVrl WileyPLUS CSecure https//edugen.wileyplus.c uni WileyPLUS : Kimmel, Accounting, 6e TER VERSION ASSIGNMENT RESOURCES Problem 19-3 Chapter 19 Homework Assignment E Exercis 1O- D Exercise 10-2 a Exercise 10-3 Exencie 19-6 ?Exercise 19.8 E Problem 19-1A The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows. Percent of Total Sales 15% 50% 10% 25% Margin Ratio 60 % 25 % 70% 80% Main entrees Desserts Beverages Problem 10-24 Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $112,000. The company has fixed costs of $1,017,000 per yean Objectivse xYour answer is incorrect. Try again. Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. o.251 and final answers to o decimal places, e.g. 2,510.) Total restaurant sales Sales from Each Product Main entrees Desserts Beverago5 VIDEO SIMILAR PROBLEN Your answer is incorrect. Try again Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling price of its entrees to increase the number of clients that it serves. It would then more heavily market its appetizers and beverages He is proposing to reduce the contribution margin ratio on the main entrees to 10% by dropping the average selling price. He envisions an expansion of the restaurant that would increase fixed costs by $585,000. A: the same time, he is proposing to change the sales mix to the following. Percent of Contribution 9:37 PM ^? O Type here to search 7/5/2018

Solution

Part A

Sales Mix Percentage * Contribution Margin Ratio = Weighted-Average Contribution Margin Ratio

Appetizers = 15 % x 60 % = 0.09

Main entrees = 50 % x 25 % = 0.125

Desserts = 10 % x 70 % = 0.07

Beverages = 25 % x 80 % = 0.200

Total.........................................0.485

Total sales required to achieve target net income = ($1,017,000 + $112,000) ÷ 0.485 =$2,327,835

Sales Mix Percentage * Total Sales Needed = Sales from Each Product

Appetizers =15 % x $2,327,835 = $349175

Main entrees = 50 % x $2,327,835 = $1163917

Desserts =10 % x $2,327,835 = $232784

Beverages =25 % x $2,327,835 = $581959

Total................................................ $2327835

Part B

Sales Mix Percentage * Contribution Margin Ratio = Weighted-Average Contribution Margin Ratio

Appetizers = 25 % x 60 % = 0.15

Main entrees = 25 % x 10 % = 0.025

Desserts = 10 % x 70 % = 0.07

Beverages = 40 % x 80 % = 0.320

Total...................................... 0.565

Total sales required to achieve target net income = ($1,602,000 + $112,000) ÷ 0.565 =$3,033,628

*$1,017,000 + 585,000 = $1,602,000

Sales Mix Percentage x Total Sales Needed = Sales from Each Product

Appetizers = 25 % x $3033628 =$758407

Main entrees = 25 % x $3033628 = $758407

Desserts = 10 % x $3033628 = $303363

Beverages = 40 % x $3033628 = $1213451

Total............................................. $3033628

Part C

Sales Mix Percentage * Contribution Margin Ratio = Weighted-Average Contribution Margin Ratio

Appetizers = 15 % x 60 % = 0.09

Main entrees 50 % x 10 % = 0.05

Desserts 10 % x 70 % = 0.07

Beverages 25 % x 80 % = 0.200

Total................................. 0.410

Total sales required to achieve target net income = ($1,602,000 + $112000) ÷ 0.410 =$4,180, 488

Sales Mix Percentage * Total Sales Needed = Sales from Each Product

Appetizers = 15 % x $4180488 = $627073

Main entrees =50 % x $4180488 = $2090244

Desserts =10 % x $4180488 = $418049

Beverages = 25 % x $4180488 = $1045122

Total............................................ $4,180,488