Question

Decision Case 20-1 Steve and Linda Hom live in Bartlesville, Oklahoma. Two years ago, they visited Thailand. Linda, a professional chef, was impressed with the cooking methods and the spices used in Thai food. Bartlesville does not have a Thai restaurant, and the Homs are contemplating opening one. Linda would supervise the cooking, and Steve would leave his current job to be the maitre d'. The restaurant would serve dinner Tuesday through Saturday. Steve has noticed a restaurant for lease. The restaurant has seven tables, each of which can seat four. Tables can be moved together for a large party. Linda is! planning on using each table twice each evening, and the restaurant will be open 50 weeks per year. The Homs have drawn up the following estimates: Average revenue, including beverages and desserts Average cost of food Chef's and dishwasher's salaries Rent (premises, equipment) Cleaning (linen, premises) Replacement of dishes, cutlery, glasses Utilities, advertising, telephone $ 45 per meal 15 per meal 5,100 per month 4,000 per month 800 per month 300 per month 2,300 per month

can i get help please step by step provided please.

Answer 1

1.Annual Breakeven number of meals-

Step 1 Calculate annual fixed cost-

• Total-$12,500*12=$150,000

Step 2 Calculate Contribution per meal-

• Average revenue per meal-Average cost per meal
• =$45-15
• =$30

Step 3 Calculate Annual Break even number of meals-

• annual fixed cost/Contribution per meal
• =$150,000/30
• =5,000 meals per annum

Step 4 Sales Revenue -

• Annual Break even number of meals*Average revenue per meal
• =5000*45
• =$225,000

2.Number of meals & Revenue in $ for earning $75,600/Year

Step 1 (Breakeven sales in $ +$75,600)/Contribution per meal

• ={(5,000*45)+75,600}/30
• =300,600/30
• =10,020 meals per annum

Step 2 Step1*Average revenue per meal

• =10,020*45
• =$450,900

3.Meals to be served per night to earn $75,600

Step Number of meals per annum/(2times*28seats*5days*50weeks)

• =10,020/14000
• =0.7157/night

4.Factors should homs consider before opening the restraunt-

• Whether Bartlesville, Oklahoma has sufficient demand of Thai food to earn profit'
• Whether Strong competitor is near the proposed place of restaurant has plan to open restaurant,
• Whether Homs will be able to cover opprtunity cost of Linda&Steve