Reference no: EM131941833

Question - Barbara Collins is the manager of Shives, a fine dining restaurant, is preparing next year's budget. She wants to examine three different levels of sales as follows: $700,000, $1,000,000 and $1,300,000. The following information upon which to make the calculations is provided.

Food cost percentage: 45 percent

Labor: Variable: 23 percent Fixed: $80,000

Other operating expenses: 8 percent

Fixed Charges: $100,000

Income taxes: 30 percent of pretax income

Required:

1. Prepare the condensed operating budget for shives at the three levels of sales indicated above.

2. Comment briefly about the impact of different levels of sales on the restaurant's profits.