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Minnie has just inherited the Disney Inn from her great, great Uncle Walt. Minnie met with Donald, the manager of Disney, and was shown the information below. Donald says his brother, a CPA has calculated the restaurants current overall contribution margin ratio at 45%. Minnies eyes glaze over. She is a famous actress with no business or restaurant background. She does however enjoy eating food especially cheese.

	Percent of Total Sales	Contribution Margin Ratio
Appetizers	10%	60%
Main Entrees	60%	30%
Desserts	10%	50%
Beverages	20%	80%

Minnie would like to settle down and retire from the acting world and she sees this as her opportunity. Minnie knows you are a smart Hill School of Business student and comes to you for help.

In order for Minnie to be able to retire she believes she needs a net take home annual salary of $112,000. Luckily, Donald has been considering a variety of options to try to improve the restaurants profitability. Donalds goal was to generate a target before tax operating income of $100,000. This target was before he knew about Minnies salary requirement. Minnies personal tax rate is 30%. The Disney Inn presently has fixed costs of $1.2 million per year.

Donald believes the restaurant could greatly improve its profitability by changing the focus of the restaurants menu and an expansion of the restaurant. The expansion of the restaurant would increase fixed costs by 50%. The proposed changes in the sales mix and contribution margins are as follows:

	Percent of Total Sales	Contribution Margin Ratio
Appetizers	20%	60%
Main Entrees	30%	10%
Desserts	10%	50%
Beverages	40%	80%

Minnie says she really needs your help. She has googled successful businesses and believes the focus of her business should be on total sales dollars. She wants to know

1. what would happen financially if the restaurant continued as it is today,
2. what Donalds suggested plan means, and
3. what the non-financial risks are if customers dont like the change in the menu focus. Minnie also encourages you to provide
4. any other information she might find helpful in this particular situation.

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