what required sales revenue is needed if the owner wants a 15 percent before tax ret 593935

A restaurant is being planned that will require an investment of $150,000 in equipment by the owner. The following shows forecasted variable cost percentages, identifiable fixed, and semifixed costs.

Variable costs will be:

Food cost is 40% of sales revenue

Wage cost is 25% of sales revenue

Other variable costs are 10% of sales revenue

Other known costs will be:

Management salary and wages

$48,000

Insurance expense

2,800

Advertising expense

4,500

Utilities and telephone expense

1,020

Rent expense

12,000

Equipment depreciation expense

20%

a. What is the breakeven level of sales revenue for the restaurant? Prepare a contribution margin income statement to confirm the breakeven calculations.

b. What required sales revenue is needed if the owner wants a 15 percent before-tax return on investment? Prepare a contribution margin income statement to confirm the CVP calculations.

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