Reference no: EM132751454

Question - Kelly Clarkton is the manager of Crunchy's Campus Cantina, located across the street from the main student housing facilities of State University. Kelly closes her bar at midnight on Friday and Saturday but has recently begun thinking about keeping the bar open until 2:00 a.m. on both days.

Kelly's last year sales were $1,850,000. She knows from examining her income statement that her total (product) cost of sales last year was $647,500 and that her other variable costs were $555,000. The costs of staffing the bar would be an additional $200 for each of the two hours Kelly would be open.

Kelly wants to compute the sales volume necessary to justify staying open the additional two hours. Help Kelly make a good decision by completing the MSP worksheet she has developed, and then answer the questions that follow.

Crunchy's Campus Cantina MSP Worksheet

Last year sales $1,850,000 100%

Variable cost $555,000 %

Minimum labor cost $ Product cost % $647,500 % Minimum sales point $

1. How much additional income each day would Kelly need to achieve to justify staying open for the additional two hours on Friday and Saturday?

2. How much additional income each weekend would Kelly need to achieve to justify staying open for the additional two hours on Friday and Saturday?