Carreras Café is a Spanish restaurant in a college town. The owner expects that
ID: 2597843 • Letter: C
Question
Carreras Café is a Spanish restaurant in a college town. The owner expects that the number of meals served in June will be 30 percent below those served in May, because so many students leave for the summer. In May, the restaurant served 4,700 meals at an average price of $20. In the summer (June through August), the average price of a meal typically increases by 30 percent and the average food cost of a meal increases by 20 percent. Other costs are typically unchanged during the summer. The following cost information is available for May.
Required:
Prepare a budgeted income statement for June. (Do not round intermediate calculations.)
Service costs (variable with respect to meals) Variable service costs (with respect to meals) Food costs $ 10,600 Labor 16,400 Other variable costs 6,000 Fixed service costs 9,600 Total service costs $ 42,600 Marketing and administrative costs Marketing (variable with respect to meals) 6,300 Administrative (fixed) 4,300 Total marketing and administrative costs $ 10,600 Total costs $ 53,200Explanation / Answer
Particulars
Amount($)
Calculation
Revenues (100-30%)=70%= .7
$85,540.00
(4700*0.7*20*1.30)
Less:
Service costs
Food
$8,904.00
10600*0.7*1.2
Labor
$11,480.00
16400*0.7
Other variable costs
$4,200.00
6000*0.7
Fixed service costs
$9,600.00
Fixed
Total manufacturing costs
$ 34,184.00
Gross profit margin($85540-$34184)
$ 51,356.00
Less:
Marketing and Administrative
Marketing(variable)
$4,410.00
6300*0.7
Administrative
$ 4,300.00
Fixed
Total marketing and administrative costs
$8,710.00
Operating profit
$ 42,646.00
Particulars
Amount($)
Calculation
Revenues (100-30%)=70%= .7
$85,540.00
(4700*0.7*20*1.30)
Less:
Service costs
Food
$8,904.00
10600*0.7*1.2
Labor
$11,480.00
16400*0.7
Other variable costs
$4,200.00
6000*0.7
Fixed service costs
$9,600.00
Fixed
Total manufacturing costs
$ 34,184.00
Gross profit margin($85540-$34184)
$ 51,356.00
Less:
Marketing and Administrative
Marketing(variable)
$4,410.00
6300*0.7
Administrative
$ 4,300.00
Fixed
Total marketing and administrative costs
$8,710.00
Operating profit
$ 42,646.00