Desired operating income before tax

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A neighborhood restaurant opens for lunch only and has a menu limited to five meals. The history of each menu item relative to its percentage of total sales, selling price (SP), and variable costs (VC) are shown in the following table: Menu Item SP VC SR% Food 1 $15.00 $7.75 16% Food 2 12.95 7.50 20 Food 3 11.00 5.50 22 Food 4 8.95 2.85 14 Food 5 9.95 6.50 8 Total variable cost of beverages averages 55 percent. The restaurant has fixed costs of $546,000 a year and wants an operating income (before tax) of at least $25,000 per year. a. What level of revenue will give the desired operating income before tax?

Reference no: EM131329535

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