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Compute the annual breakeven number of meals

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Reference no: EM131786926

Alonzo and Brenda Patterson live in Landsdale, Virginia. Two years ago, they visited Thailand. Brenda, a professional chef, was impressed with the cooking methods and the spices used in Thai food. Landsdale does not have a Thai restaurant, and the Patterson's are contemplating opening one. Linda would supervise the cooking, and Alonzo would leave his current job to be the maître d'. The restaurant would serve dinner Tuesday through Saturday.

Alonzo noticed a restaurant for lease. The restaurant has eight tables, each of which can seat four patrons. Tables can be moved together for a large party. Brenda is planning two (2) seatings per evening, and the restaurant will be open 50 weeks per year.

The Patterson's have drawn up the following estimates:

Average revenue, including beverages and desserts $ 55 per meal

Average cost of food $ 20 per meal

Chef's and dishwasher's salaries $ 5,400 per month

Rent (premises and equipment) $ 4,500 per month

Cleaning (linen, premises) $ 900 per month

Replacement of dishes, cutlery, glasses $ 400 per month

Utilities, advertising, telephone $ 3,300 per month

Questions

1) Compute the annual breakeven number of meals and sales revenue for the restaurant.

2) Compute the number of meals and the amount of sales revenue needed to earn operating income of $85,200 for the year.

3) How many meals must the Patterson's serve each night to earn their target profit of $85,200?

Reference no: EM131786926

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