An Espresso Coffee Bar is currently doing $600,000 a year in sales revenue. Beverage (mostly coffee) and Food Cost (pastries, sandwiches, etc.) is 28% and other variable costs at this level of sales revenue are 38%. Fixed costs are $175,000.

The Espresso Coffee Bar has a gross profit of $432,000 ($600,000 x 0.72). After deducting the fixed costs of $175,000 from the gross profit, the Espresso Coffee Bar has a net profit of $257,000 ($432,000 - $175,000).

a. What is the annual operating income (before tax)? b. What is the breakeven sales level in dollars? c. The owner wants to increase the manager's salary by $12,000 a year. By how much will sales revenue have to increase to provide this ad-ditional salary and maintain the current level of operating income?(Any added sales revenue will come from increasing seat turnover by increasing customer service.) d. what does Contribution Margin mean?