A restaurant is being planned that will require an investment of $150,000 in equipment by the owner. The following shows forecasted variable cost percentages, and identifiable known costs (considered fixed and semifixed costs at start-up).
a. What is the breakeven level of sales revenue for the restaurant? Prepare a contribution margin income statement to confirm the breakeven calculations.
b. What required sales revenue is needed if the owner wants an 18% operating income (before-tax) return on investment? Prepare a contribution margin income statement to confirm the CVP calculations.
