The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in south western style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows.
Percent of Total Sales Contribution Margin Ratio
Appetizers 15% 70%
Main entrees 50% 25%
Desserts 10% 80%
Beverages 25% 80%
Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $116,000. The company has fixed costs of $1,417,000 per year.
Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income.
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