Save:
Favorite
Share:
Calculator Allowed: Yes

Question

Answer

Transcription of this question: 5.Following the loss made by Owganix in 2006, Max and Terry commissioned Seagers, a firmofaccountants, to prepare a detailed report on the financial situation Ofthe firm. As part of their reportSeagers looked in detail at the operation Of the restaurant business and suggested that Max and Terryprepare a break-even analysis for the restaurant to ensure that they were aware Of when the restaurantmoved into profitability each year. The accountants gave the following information:• average level Of expenditure per meal CAS38• average cost Of ingredients for each meal CAS 15• wages for waiting staff CAS45 000 per annum• salaries for chefs CA $60 000 per annum• heat, electricity, lighting and Other expenses CAS55 000 per annum• restaurant capacity 1200 meals per month.Seagers also suggested that each Of the different areas Of OrganixS business should be set up asseparate profit centres to allow for proper assessment of the profitability Of each of them.Seagers also suggested that each Of the different areas Of OrganixS business should be set up asseparate profit centres to allow for proper assessment of the profitability Of each of them.(a)(b)(c)Using examples from OlganixS restaurant business, distinguish between fixed,semi-variable and variable costs.Assuming that the restaurant is currently serving 750 meals per month,prepare a break-even chart showing clearly the annual break-even levelOf output, level of profit and the margin of safety.Discuss Seagers ‘ proposal to split the different areas Of O’ganix business intoprofit centres.[6 marks][6 marks][8 marks/

Leave a Reply