Lynn Hoffman is the owner of the Sky View restaurant. She is interested in determining dollar…
Lynn Hoffman is the owner of the Sky View restaurant. She is interested in determining dollar sales and number of guests needed to breakeven and to generate her desired profits. From her financial records, she has calculated the following information:
a. Complete the following grid, and determine her before‐tax profit.
b. Using the information from part (a) of this question, calculate the following.
(Spreadsheet hint: Use the ROUNDUP function for “Rounded up − Breakeven point in guest served” and “Rounded up – Guests served to achieve desired after‐tax profit.”)
c. Based on her calculations, Lynn is not sure that she can attract as many guests as she needs to achieve her desired after‐tax profit. Therefore, she has decided to make some changes to improve her situation. Due to these changes, she has been able to add low‐cost specials at lunch to reduce her overall average selling price by $2.00, decrease her variable cost percentage by 5%, and lower her annual fixed costs by $10,000. These changes are summarized in the following table:
After implementing these changes, what are Lynn’s sales dollars and guests served required to achieve her after‐tax profit? Complete the following grid and calculations.
(Spreadsheet hint: Use the ROUNDUP function for “Rounded up – Guests served to achieve desired after‐ tax profit.”)