## [answered] Brian and Bart Johnson live in Macon, Georgia. Two years ag

?Brian and Bart Johnson live in Macon, Georgia. Two years ago, they visited Thailand. Bart, a professional chef, was impressed with the cooking methods and the spices used in the Thai food. Macon does not have a Thai restaurant, and the Johnsons are contemplating opening one. Bart would supervise the cooking, and Brian would leave his current job to be the ma?tre d'. The restaurant would serve dinner Tuesday through Sunday.

Brian has noticed a restaurant for lease. The restaurant has ten tables, each of which can seat four. Tables can be moved together for a large party. Bart is planning two seatings per evening, and the restaurant will be open 50 weeks per year.

The Johnsons have drawn up the following estimates:

Average revenue, including beverages and desserts \$50 per meal

Average cost of the food \$18 per meal

Chef's and dishwasher's salaries \$75,000 per year

Rent (premises, equipment) \$5,000 per month

Cleaning (linen and premises) \$1,000 per month

Replacement of dishes, cutlery, glasses \$500 per month

Utilities, advertising, telephone \$2,500 per month

Required:

a) Compute annual breakeven number of meals and sales revenue for the restaurant.

b) Compute the number of meals and the amount of sales revenue needed to earn net income of \$200,000 for the year. The tax rate is 32 percent.

c) Should the Johnsons open the restaurant? Support your answer.

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This question was answered on: Sep 18, 2020

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