Assignment 1

HA355 : The Class : Financial Statement : CVP Analysis : Assignment 1

Answer the Review Questions

The XYZ Restaurant in Reno Nevada has just started a new restaurant in Arizona and has asked you to analyze their operation. Their latest month shows the following results:

CVP
XYZ RESTAURANT

MEALS	40,000
AVG. PRICE	$ 9.00
AVG. VARIABLE COST	______5.85
CONTRIBUTION MARGIN	3.15

Ratios:
VARIABLE COST	65.0%
CONTRIBUTION MARGIN	_____35.0%

CONDENSED INCOME
STATEMENT___________________
REVENUE	$ 360,000
VARIABLE COST	____234,000
CONTRIBUTION MARGIN	126,000
FIXED COST	____100,000
INCOME BEFORE TAXES	26,000
INCOME TAKES @ 20%	______5,200
NET INCOME	$ 20,800

Down load the answer spreadsheet and fill in the blank spaces, including the condensed income statement, for each of the following scenarios:

Under the column titled "Breakeven," calculate the number of meals needed to breakeven.
Under the column titled "IBT Profit," calculate the number of meals needed to generate income before taxes of $30,000.
Under the column titled "NI Profit," calculate the number of meals needed to generate net income of $30,000.
Under the column titled "+ Fixed," calculate the number of meals needed to generate net income of $30,000. Assume that Fixed Costs have increased by $10,000.
Under the column titled "+ Var," calculate the number of meals needed to generate net income of $30,000. Assume that fixed costs have increased by $10,000 and that variable cost per meal has increased by $.50 per meal.
Under the column titled "+ Price," calculate average selling price needed to generate net income of $25,000. Assume that: (1) fixed cost have increased by $10,000, (2) variable cost per meal has increased by $.50 per meal and (3) 40,000 meals are sold.

Once you have finished you should:

Go on to Topic 4: Food Cost Accounting Systems
or
Go back to Topic 3: Cost-Volume-Profit Analysis

Send E-mail to Kevin Helland
or call (520) 523-1001