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

Problem 1The Eastpointe Café’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 café’s contribution margin (CM) and contribution margin ratio (CMR) to begin with?2.What are the CM and CMR based strictly on the lunch special–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 June–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?

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