King City Inc. manufactures machine tools. The production planner who oversees the production of two of King City’s machines needs to determine how many of each to produce this month…..
What is the corresponding number of meals to be sold?
Imagine you are head of the food and beverage department in a large Los Angeles hotel complex. One of the hotel’s restaurants currently generates an ROI of 11%, based on a value of € 400,000 in total activities attributable to the restaurant itself. The percentage ebit is on average 30%. The restaurant manager believes that by reducing prices by 5%, the restaurant’s profitability would increase. Currently, the average revenue per meal served is €50. a. What is the asset turnover ratio of the restaurant? (10 points) b. If the price cut is adopted, what is the new level of revenues required in order not to reduce ROI? (10 points) C. What is the corresponding number of meals to be sold? (5 points)