Reference no: EM132521879

Brian and Nancy Soon live in Savannah, Georgia. Two years ago, they visited Thailand. Nancy, a professional chef, was impressed with the cooking methods and the spices used in Thai food. Savannah does not have a thai restaurant, and the Soons are contemplating opening one. Nancy would supervise the cooking, and Brian would be the maître d'. The restaurant will serve food from Tuesday through Saturday.

Brian noticed a restaurant for lease. The restaurant has 7 tables, each of which can seat 4 guests. Tables can be moved together for a large party. Nancy is planning 2 seating per evening and the restaurant will be open 50 weeks per year.

The Soons have drawn up estimates below:

Average Revenue (including beverages and dessert) = $40 per meal

Average Cost of the Food = $12 per meal

Chef's and dishwasher's salaries = $50,400 per year

Rent (premises, equipment) = $4,000 per month

Cleaning (linen and premises) = $800 per month

Replacement of dishes, cutlery, and glasses = $300 per month

Utilities, Advertising, Telephone = $1,900 per month

Required:

Question 1: Compute annual break even point in meals (units) and (sales) dollars

Question 2: Computer number of meals in an hour of sales revenue that will be required to earn an income of $75,000 how many meals must the Soon's serve to earn the $75,600?

Question 3: Should Brian and Nancy open the restaurant?