The Great Tamale Best friends, Nathan and Cody, decided to start their own business which wrould bring authentic Mexican food to their local communities. Together they have started the Great Tamale, a food cart. Nathan is the chef, having spent considerable time studying Mexican culsine abroad. Cody takes the orders and manages the business operations. Thanks to an appearance on the Food Network, the Great Tamale food cart has experienced a phenomenal first year. In its first year of operations the company sold $31,125$ plates of food and had the below sales and cost figures

Sales$)$ $$217,875\mathrm{.}00$

Variable cost$)46,687\mathrm{.}50$

Contribution margin$)171,187\mathrm{.}50$

Fixed Costs$)90,000\mathrm{.}00$

Income before taxes$)81,187\mathrm{.}50$

Income taxes $(32\%$ rate$))25,980\mathrm{.}00$

Net Income $$55,207\mathrm{.}50$

After experiencing such great success with their food cart, Nathan and Cody are

considering purchasing a food truck to serve other communities. This would allow the

Great Tamale, GT$,$ to reach even more customers in different geographic locations.

There would be an increase in the selling price per plate. There will also be an

increase in the fixed costs of $$30,000$ for advertising to inform the public of this change

$($this amount is already included below under Food Truck data$).$ The financial information

is presented below for this alternative as well as the original data. Assume $31,125$ plates

are sold for the food cart and $45,625$ plates are sold for the food truck

$4.)$ Compute the operating leverage under each scenario. What does this figure

mean? Why is it important to management?

$5.)$ If the company wishes each scenario, food cart and restaurant, to generate net

income $($after$-$tax$)$ of $$170,000,$ what is the amount of sales that needs to be

generated? How many plates will then need to be sold? Prepare a contribution

margin statement for this step and verify that your after$-$tax net income in fact

equals $$170,000$ for both the food cart and restaurant.

$6.)$ Assume that the company expects sales to decline by $20\%$ next year. There will

be no change in plate price. Prepare forecasted financial results for next year

following the format of the contribution margin income statement as shown above

with columns for each of the two types $($assume a $32\%$ tax rate, and that any loss

before taxes yields a $32\%$ tax savings$).$

$7.)$ Assume that the company expects sales to increase by $20\%$ next year. There will

be no change in plate price. Prepare forecasted financial results for next year

following the format of the contribution margin income statement as shown above

with columns for each of the two types $($assume $32\%$ tax rate, and that any loss

before taxes yields a $32\%$ tax savings$).$

$8.)$ Identify at least two advantages and disadvantages of having a brick$-$and$-$mortar

restaurant versus a food truck

$9.)$ Thinking about sales, is there any day of the week or time of day when greater

sales are expected? Which type is more sensitive to this occurrence? Which type

is less sensitive to this occurrence? Which type is more advantageous, why