Problem 19-3A (Part Level Submission) The Grand Inn is a restaurant in Flagstaff

Question

Problem 19-3A (Part Level Submission) 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 Appetizers Main entrees Desserts Beverages 15 % 50 % 10 % 25 % Contribution Margin Ratio 70% 25 % 80 % 80 % 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 $119,000. The company has fixed costs of $1,391,000 per year (a) 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. 0.251 and final answers to 0 decimal places, e.g. 2,510.) Total restaurant sales Sales from Each Product Appetizers Main entrees Desserts Beverages

Explanation / Answer

Computation of total contribution:

Computation of combined contribution margin ratio:

Computation of total sales of all the products:

Computation of sales of each product:

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