Solution-What are the maximum cost of goods sold per meal

What are the maximum cost of goods sold per meal

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Reference no: EM133094354

Question - Big Gerson's is known as "The Happy Place" for diners who value quantity over quality due to their amazing one price all you can eat menu. The Leviathon Corporation which owns the Big Gerson's chain of diners are looking at the financial performance of an average restaurant which shows the following:

Selling Price $15.00

Cost of Goods Sold (per unit) $4.00

Variable Marketing Costs 10% of sales

Total Fixed Costs $2,850,000

Big Gerson's is contemplating adding an all you can eat luxury dessert bar to their restaurants. They believe that this would allow them to increase their price per meal to $20.00 and their market research shows that they could sell 800,000 meals annually with this new offering. Their CEO has set a profit requirement of $5.00 per meal. With fixed costs of $2.0 million and variable costs of 8% of sales, what are the maximum cost of goods sold per meal that Big Gerson's could incur?

Reference no: EM133094354

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What are the maximum cost of goods sold per meal

Reference no: EM133094354

Reference no: EM133094354

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