Labor Cost Considerations

Complete this assignment and submit it to the dropbox by the required due date and time.  Most students use Microsoft Excel to complete the problems and attach the answers.  Other students have scanned their answers, and sent it as attachment.

1. The Alibi Restaurant is normally open for business until 8:00 P.M. Recently, business has been getting better during the time period just before closing, and the manager is attempting to determine the viability of remaining open until 9:00 P.M. She estimates her additional costs for the extra hour as follows:

Labor $75
Heat, Light, and Gas $12
Variable cost of food, beverage, etc. 40% of sales
a. What additional sales are necessary for the manager to break even exactly on the extra hour of opening?

b. If the manager were able to obtain $280 in sales volume for the extra hour, what income could be applied to normal overhead expenses?

2.  A restaurants income statement shows the following cost and sales structure:

Sales $450,000
Fixed Costs $135,000
Directly Variable Costs $120,000
What must the semivariable cost figure be if the restaurant is to show a profit of $30,000?

3. In Erphalenes Restaurant, fixed costs are 30 percent of sales, and directly variable costs are 25 percent. What percentage of sales should semivariable costs be if the restaurant is to show a 10 percent profit?

4. A restaurant selling hamburgers employs only one cook. During the peak lunch hour, the cook is able to produce 120 hamburgers per hour. During the slack afternoon period, he produces only 30 hamburgers per hour. If each hamburger sells for $0.60 and the cook is paid $8.00 per hour, calculate the labor cost per hamburger for one hour during each of the two periods described.



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