You own a 132-seat restaurant, which opens 6 days a week for 52 weeks of the year. The seat turnover per day is 2.2.

You have the following projections about the costs for next year.

The required ROE is 18% on your $240,000 in a restaurant.

Tax rate: 28%

Furniture & Equipment: Book value = $112,000, Depreciation = 20% per year

Bank loan: Balance owed: $50,000, interest rate: 12%

Insurance: $4,500 Licenses: $3,200 Utilities: $12,600

Maintenance: $1,200 Salary: $48,900

Cost of sales (food & beverage): 35% of sales revenue

Wage: 33% of sales revenue

Other variable costs: 8% of sales revenue

Required

a. What is the total fixed cost?

b. Use the bottom-up approach to find the required revenue.

Revenue
- Variable cost
Contribution margin
- Fixed cost
Operating income
- Tax
Net income

c. What is the average check based on the required revenue?

Answer rating: 100% (QA)

To calculate the total fixed cost we need to sum up all the fixed costs mentioned in the projections ... View the full answer