Eileen's Restaurant Cvp Analysis

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A. Eileen will need to sell 834 health burgers to break even each month. This is computed by using the fixed monthly costs of $1000 divided by the contribution made per health burger of $1.20. $1000/($1.95-$.75) = 833.333333 B. If Eileen wanted to make $5000 pre-tax dollars each month she would have to sell 5000 health burgers each month. This is computed by using the fixed monthly costs of $1000 added with the pre-tax profit of $5000 divided by the contribution made per health burger of $1000. ($1000+$5000)/$1.20 = 5000 C. If Eileen wanted to make $9000 pre-tax profit each month by selling meal deals for $4.85, she would need to sell 9831 meal deals per month. This is computed by using the fixed monthly costs of $20,000 added with the pre-tax profit of $9000 divided by the contribution made per meal deal. Using the chart below you can see how much is made per meal deal. ($20,000 + $9000)/$2.95 = 9830.50847 | |Selling Price |Variable Cost |Contribution | |Health Burger |$1.95 |$0.75 |$1.20 | |Mixed Salad |$1.95 |$0.90 |$1.05 | |12 ounce drink |$0.95 |$0.25 |$0.70 | |Combined |$4.85 |$1.90 |$2.95 | D. For the month of May where Eileen sold 8000 health burgers, 8500 salads, and 15,000 fizzy drinks she made $9025 pre-tax dollars. This number is computed by multiplying the contributions per item times the number of items sold. Then you need to total all the contributions together. Then minus the fixed cost of $20,000 from the total contributions for the pre-tax profit. If Eileen is concerned about sales she should be focusing on the product that makes the most margin, or contribution. The health burger makes $1.20 per

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