Reference no: EM132514409

You are the cost accounting manager for Dave's Seafood Restaurant. You have just received word that, due to the COVID 19 Virus, you must suspend all operations except take out. You operate in one location in Ct. , have 20 full and part time employees and two departments (meals and liquor) with 14 employees for food and 6 for liquor. All employees are variable and are paid $14 per hour and work an average of 1,200 per year each. sales were $2,000,000 ( $1,200,000 from food and $800,000 from liquor ) and margin for food was 18% and Liquor was 55%. Fixed costs equal 10% of sales for food and 20% of sales for liquor.

Question 1: Assume you originally planned to sell each meal at $22 and each bar beverage at $8. What was your original budgeted quantity.

Question 2: What is your original break even quantity of meals and beverages.

Question 3: Dave estimates that after he complies with the order, liquor sales will be $0 and food sales will be $600,000. Prepare new P&L with these assumptions and calculate the profit or loss on $600,000 of food sales.

Question 4: Please provide general comments as to what costs Dave would have to cut in order to comply with the order and comment on the general effect to the community.