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1. Jim Sherman is the manager of the Half Shell Oyster House. Jim is reviewing labor cost percentages for the current accounting period and is doing some financial planning for the next period. He separates labor cost into three categories: front of house, back of house, and management. Jim wants to know what the impact on labor cost percentages will be in the next accounting period if he:

1. Gives all employees a 3% raise and experiences no decline in sales.
2. Increases menu prices and thus achieves a 5% sales increase, but does not give any employees a raise
3. Increases menu prices, achieves a 5% sales increase and also gives all employees a 3% raise

Help Jim with the financial projections by completing the following chart and then answering the questions that follow. You must answer all questions and complete the chart for full credit.

1. What was Jims back of the house labor cost percentage for the current period?

2. What will be Jims front of the house labor cost percentage next period if he gives all employees a 3 percent raise and experiences no decline in sales?

3. What will be Jims total labor cost percentage next period if he increases menu prices, achieves a 5 percent sales increase, and also gives employees a 3 percent raise?

Half Shell Oyster House
	Current Period		Next Period
			With 3% Wage Increase		With 5% Menu Price Increase		With 5% Menu Price Increase and 3% Wage Increase
	$	%	$	%	$	%	$	%
Sales/ Forecasted Sales	$ 85,000	100%	$ 85,000	100%		100%		100%
Cost of Labor
Front of the house	$ 10,200		$ 10,506
Back of the house	$ 12,750
Management					$ 5,525	6.2%
Total cost of labor	$ 28,475	33.5%

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