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Compute the net income if the number of sales checks

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The Rapid Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $ 450,000 per year. Service varies from a cup of coffee to full meals. The average sales check for each customer is $8.00. The average cost of food and other variable costs for each customer is $ 3.20. The income tax rate is 30%. Target income after tax is $ 105,000.

Required :

Question a) Compute the revenues needed to obtain the target income.

Question b) How many sales checks are needed to breakeven? Verify your answer.

Question c) Compute the net income if the number of sales checks is 150,000. Calculate the degree of operating leverage at the present level of sales.

Reference no: EM132655565

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