Exercise 3.2 Using the Excel spreadsheet:

1. Assume that variable costs are not controlled and that budgeted costs of sales for food and beverage increase to $600,000 and total sales are as budgeted ($1,665,472.20). Calculate profit for Barnaby ’ s Hideaway. All other costs remain the same.

2. Calculate the new variable rate and new contribution rate, assuming the same variable salaries and employee benefits.

3. Calculate the break - even point for Barnaby ’ s Hideaway using the new contribution rate.

4. Using the new contribution rate, calculate the sales level necessary for Barnaby ’ s Hideaway to earn the budgeted profit of $166,794.43.

5. Assume that the new contribution margin falls to $12.60. Calculate the number of customers necessary to break even.

Exercise 3.3—Follow the instructions on the disc for this exercise .