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Compute the number of meals that must be served each month

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Reference no: EM132523334

The Eastman Family Restaurant is open 24 hours per day. Fixed costs are $34,000 per month. Variable costs are estimated at $11 per meal. The average revenue is $15 per meal.

Required:

Question A) Assuming that the restaurant currently serves 9,000 meals per month, compute:

  1. the operating profit per month using the marginal costing P&L or equation
  2. the breakeven point in number of meals
  3. the safety index in number of meals
  4. the operating leverage

Question B) Compute the number of meals that must be served each month to earn a profit before taxes of $8,000 per month.

Question C) Assume that fixed costs increase by $6,000 per month. How many additional meals must be served to earn a profit before taxes of $8,000 per month?

Reference no: EM132523334

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