(Q.6) The Express Banquet has two restaurants that are open 24-hours a day. Fixed costs for...

1.Revenues needed to earn the target income can be computed as:

Let R be the revenue to obtain the target net income

Revenue-variable cost-fixed cost=target income/(1-tax rate)

Variable cost %=(variable cost/sales cost)*100

Variable cost=($3.40/$8.50)*100=40%

R-0.40 R-$459,000=$107,100/(1-0.30)

0.60 R-$459,000=$153,000

0.40 R=$612,000

R=$1,530,000

Thus revenue needed to earn the target income is $1,530,000.

2.Break-even customers=Fixed cost/Contribution per customer

Break-even customers=$459,000/$5.10

Break-even customers=$90,000

*contribution per customer=sales cost per customer-variable cost per customer

contribution per customer=$8.50-$3.40=$5.10

3.Customers needed to earn net income of $107,100=Sales revenue/sales cost per unit

Customers needed to earn net income of $107,100=$1,530,000/$8.50

Customers needed to earn net income of $107,100=$180,000 customers

4.Net income if the customers are 170,000 can be computed as:

Thus, if the number of customers are 170,000 then net income will be $285,600