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Essay / Research Paper Abstract
This 8 page paper looks at a case supplied by the student and shows how to work out the break even point and the sales required to gain the profit objective using the figures given. The impact of increasing costs, decreasing customers and the cost of a renovation are considered in terms of the impact it will have on the number of sales needed. All calculations are shown.
Page Count:
8 pages (~225 words per page)
File: TS14_TErestbe.rtf
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Unformatted sample text from the term paper:
fixed costs that need to be covered and the level of contribution that is made towards those fixed costs for each sale made. These are calculated below. The first stage
is to take all the fixed costs and add them together. It is assumed that the fixed costs have been given on a monthly basis. Figure 1 Total fixed costs
Fixed costs Fixed costs (ex labor) (a) 30,750 Labor fixed costs (b) 29,370 Total fixed costs (c ) (a + b) 60,120 Now we need to look at how much
of the revenue received from the checks can go towards these fixed costs. The first stage is to add together the variable costs per check. It is assumed that the
average check is $30. Figure 2 Total variable costs per check Variable costs Cost of food per check (d) 9.50 Labor (variable) (e) 10.00 Total variable costs (f) (d+e)
19.50 With the variable cost per check it is possible to calculate the contribution that each check can make to the overheads, this is the money received less the variable
costs. This is shown in figure 3 Figure 3 Contribution per check Contribution Sale price per check (g) 30.00 Variable costs (f) 19.50 Contribution per check (h) (g -
f) 10.50 Now we know the level of contribution per check we can calculate the amount of checks that would need to be paid for the restaurant to be breaking
even. This is calculated by taking the total overheads and dividing it by the contribution. The number fo checks needed to break even can then be multiplied by the average
check value to get the revenue break even point Figure 4 No. of checks to break even Break Even Total fixed costs (c
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