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The Crane Inn is a restaurant that specializes in southwestern style meals in a moderate price range. Paul White, the manager of Crane, has determined that during the past two years the sales mix and contribution margin ratio of its offerings have been as follows: Appetizers Main entrees Desserts Beverages Percent of Total Sales 10% 60% 10% 20% Contribution Margin Ratio 60% 30% 50% 80% Paul is considering a variety of options to try to improve the restaurant's profitability. Her goal is to generate a target operating income of $130,000. The company has fixed costs of $1,227,200 per year. (b) x Your answer is incorrect. Paul believes the restaurant could greatly improve its profitability by reducing the complexity and selling prices of its entrees to increase the number of clients that it serves, and by more heavily marketing its appetizers and beverages. She is proposing to drop the contribution margin ratio on the main entrees to 10% by reducing the average selling price. She envisions an expansion of the restaurant that would increase fixed costs by 50%. At the same time, she is proposing to change the sales mix to the following: Percent of Total Sales 20% 30% Appetizers Main entrees Desserts Beverages Contribution Margin Ratio 60% 10% 50% 80% 10% 40% Calculate the total restaurant sales and the sales of each product line that would be necessary in order to achieve the desired target operating income if Paul's changes are implemented. Appetizers $ 777,000 Entrees 1,165,500 $ $ Desserts 388,500 Beverages $ 1,554,000 Total sales 3,885,000 x Your answer is incorrect. Try again. Suppose that Paul reduces the selling price on entrees and increases fixed costs as proposed in part (b), but customers are not swayed by the marketing efforts and the sales mix remains what it was in part (a). Compute the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 10.251 and final answers to o decimal places, e.g. 2,510.) Total restaurant sales 4477895 Appetizers Main entrees Sales from Each Product X 671684 S x 2238948 $ X 447790 $ x 1119474 $ Desserts Beverages

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