# problem 1the eastpointe caf s average lunch sells for 12 while its variable costs pe 4527129

Problem 1The Eastpointe CafÃ©â€™s average lunch sells for \$12, while its variable costs per lunch average \$8.00. It plans to advertise a Monday lunch special for \$11. The special would cost Eastpointe \$7.75 per meal (variable costs). An ad in the local paper to promote the special would cost Eastpointe \$200.Required:1.What are the cafÃ©â€™s contribution margin (CM) and contribution margin ratio (CMR) to begin with?2.What are the CM and CMR based strictly on the lunch specialâ€“related price and cost?3.How many lunch covers must be sold to cover the promotion of the luncheon special?Problem 2The 100-room limited-service Pepper Inn has an ADR of \$80 and variable costs per room sold of \$15. Assume there is no other sales activity. Its monthly fixed costs total \$100,000.Required:1.How many rooms must be sold to break even?2.What day of the month does it break even if it averages a paid occupancy percentage of 60 percent? Assume all 100 rooms are available for sale each day.3.If variable costs are reduced by \$3 and fixed costs increase by \$72,000 annually, what are the monthly breakeven revenues?Problem 3Matt Schmidt has spent \$750 for a tent, table, and chairs for his lemonade stand. He figures he can sell a glass of lemonade in the park to little league players for \$.75. His cost per drink is estimated to be \$.20. He also has to cover napkins, cups, and other variable costs estimated to be \$.05 per glass of lemonade sold.He will open his business on June 1 (a Monday) and be open five days each week for the summer months of Juneâ€“August. He will pay his parents \$2 each day to transport him and his materials to and from the park.Matt projects daily sales of 100 glasses of lemonade.Required:1.What is his contribution margin?2.What is his breakeven point (in units), given that he wants to cover all of his costs?3.What day of the summer will he break even?