Required:

1) Computw the contribution margin ratio for the food department

2) Compute the BI's weighted average CMR

3) Compute the BI's breakeven point

4) If the BI wants to make $2,000,000 of net imcome, what must its room sales equal?

5) If the Bi desires a pretax cash flow of $500,000 what must its total revenu equal? assume its debt reduction payments total $500,000 for the year. Also it would liek to pay $250,000 in cash dividends during the year

6) The food department manager has proposed running an ad in the local paper to get more business.Assume the display ad will cost $500. How many meals must be sold to make $300 pretax profit. Average meal sells for $12.00

The condensed income statement of the Baker Inn (BI) is as follows: Revenue Variable Costs Fixed Costs $5,000,000 3,000,000 500,000 $1,000,000 1,000,000 200,000 $500,000 1,000,000 100,000 Rooms Food Other (Profit Center) Total department income Other variable expenses* Other fixed expenses** Pretax income Income taxes Net income Departmental Income $3,500,000 1,000,000 200,000 4,700,000 850,000 2,000,000 1,850,000 500,000 $1,350,000 * 107% of total vevenue **1,000,000 depreciation Daired