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Valentin [98]
3 years ago
6

The Express Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $ 451 comm

a 000 per year. Service varies from a cup of coffee to full meals. The average sales check per customer is $ 8.20. The average cost of food and other variable costs for each customer is $ 4.10. The income tax rate is 30​%. Target net income is $ 114 comma 800. Requirements 1. Compute the revenues needed to earn the target net income. 2. How many customers are needed to break​ even
Business
1 answer:
KonstantinChe [14]3 years ago
8 0

Answer:

(1) $1,230,000

(2) 110,000 customers

Explanation:

Given that,

Fixed cost = $451,000 per year

Average sales check per customer = $ 8.20

Average cost of food and other variable costs for each customer = $ 4.10

Income tax rate = 30​%

Target net income = $114,800

(1) Contribution margin ratio:

= (Selling price - Variable price) ÷ Selling price

= ($ 8.20 - $ 4.10) ÷ $ 8.20

= 0.5

Income before tax:

= Net income ÷ (1 - Tax rate)

= $114,800 ÷ (1 - 0.3)

= $164,000

Desired revenue (dollars):

= (Fixed cost + Income before tax) ÷ Contribution margin ratio

= ($451,000 + $164,000) ÷ 0.5

= $1,230,000

(2) Customers are needed to break​ even:

= Fixed cost ÷ contribution per unit

= $451,000 ÷ ($8.20 - $4.10)

= $451,000 ÷ $4.10

= 110,000 customers

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Answer:

A.

Explanation:

An improve in technology will allow firms to produce in an effective way therefore, with the same resources, firms will produce more units. This will cause an increase in total supply: at the same price, firms will offer more units. In this case, at prices $1, $2, $3, $4 and $5 the new quantities will be 6,8,10,12. In the demand and supply graph, this looks as shift to the right of the supply curve (figure attached).

It is not option B because the problem says increase in quantities "at these prices". It is not option C because an increase in taxes will increase costs of production, thus firms will decrease units of production. It is not option D because changes in income will affect demand.

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3 years ago
If a 30% price increase for Product A causes a 10% decrease in its quantity demanded, but no change in the quantity demanded for
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Answer:

The correct answer is: Zero, Option c.

Explanation:

The price elasticity of demand shows the change in the quantity demanded of a commodity due to a change in the price of the commodity.  

The cross-price elasticity is the change in the quantity demanded of a product because of a change in the price of related good.  

The cross-price elasticity is calculated by finding the ratio of proportionate change in quantity demanded and proportionate change in price.  

Cross-price elasticity in this situation will be

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The cross-price elasticity is zero. This implies that the two goods have no relation.

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4 years ago
Henderson Co. has fixed costs of $36,000 and a contribution margin ratio of 24%. If expected sales are $200,000, what is the mar
GREYUIT [131]

Answer:

The margin of safety as a percent of sales is 25%

Explanation:

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Break-even point = Fixed cost / Contribution margin ratio = $36,000 / 24% = $150,000

Margin of safety is the level of sales at which the business is safe from making loss. Margin of safety measures the profit after the break-even point.

Margin of Safety = Total sales - Break-even point = $200,000 - $150,000 = $50,000

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