Reference no: EM132338483

Question

Czesc Restaurant has 40 seats and only operates 9 hours a day. There are two new catering outlets located near Czesc Restaurant opened in April 2019, since then, the sales of Czesc Restaurant dropped. Below are the expenses of Czesc Restaurant for May 2019:

Advertising $10,000

Casual wages (10% of sales revenue) 55,000

Depreciation 5,000

Food and beverage cost (35% of sales revenue) 192,500

'General and administration 8,000

Other fixed costs 57,000

Other variable costs (5% of sales revenue) 27,500

Rent 150,000

Staff salaries 130,000

Utilities 75,000

b) Assumed all fixed costs and the proportion of variable costs incurred in June 2019 is the same as in May 2019, and the forecasted check average is $185.

i) Determine the breakeven sales level (in terms of sales revenue and number of covers served) in June 2019. Show your calculation.

ii) Draw a breakeven graph to identify the breakeven sales level. You should indicate the fixed costs and the breakeven level in sales revenue and covers served on the graph.

iii) If the projected seat turnover is 1.9 times in June 2019, what is the projected number of covers served in June 2019

iv) If the cost of food and beverage is decreased to 30% of sales revenue, the total fixed costs is increased by $10,000, and the owner of the restaurant is expected to see a profit of $50,000 in June 2019, determine the sales revenue required.

c) In view of the intensified competition, suggest any three (3) actions with example that Czesc Restaurant can take to increase sales revenue but without raising the selling price?