Watson Walbert has been the executive chef at the Altine Restuarant for five years. Altine restaurant is located in a "dry" area (alcoholic beverage sales are illegal), so it only sells food. In the last five years, Watson has worked for several general managers. The new general manager, however, is a real stickler for staying in budget, and at the moment Watson is a bit worried. According to the November's Spreadsheet, the general manager sent Watson, had exceeded his food cost budget significantly. He felt that his team had performed well, but according to the memo he got from the owner, he still had to explain his department's "sub-par" performance to the owner in person.

Watson is confused, though. Although he spends more on food cost, he also sold more covers, so his food cost should be higher than originally budgeted. Watson decides to calculate a flexible budget based on his actual number of covers sold to see if he has, indeed, had cost control problems in any of his line items, especially food cost. Help him calculate his flexible budget, and then answer the question that follows

Altina Restaurant
Flexible Budget For November
November original budget number of covers		18,000	November original budget check average				$ 9.00
November actual number of covers		21,000	November actual check average
	Variable Dollars Per Cover	Original Budget	Flexible Budget	Actual	Variance	Favorable	Unfavorable
NUMBER OF COVERS		18,000	21,000	21,000
Sales: Food	$ 9.00	$ 162,000		$ 200,000
LESS VARIABLE COSTS
Food Cost	$ 3.12	$ 56,160		$ 60,500
Management, Staff, and Benefits	$ 1.25	$ 22,500		$ 22,000
Telephone	$ 0.02	$ 360		$ 575
Marketing	$ 0.08	$ 1,440		$ 1,750
Utilities	$ 0.14	$ 2,520		$ 2,500
Repairs and Maintenance	$ 0.11	$ 1,980		$ 2,600
Contribution Margin	$ 4.28	$ 77,040		$ 110,075
LESS FIXED COSTS
Management, Staff, and Benefits		$ 28,800	$ 28,800	$ 28,800	0
Telephone		$ 360	$ 360	$ 360	0
Marketing		$ 5,400	$ 5,400	$ 5,400	0
Utilities		$ 3,600	$ 3,600	$ 3,600	0
Repairs and Maintenance		$ 150	$ 150	$ 150	0
Administrative and General		$ 2,000	$ 2,000	$ 2,000	0
Depreciation		$ 1,000	$ 1,000	$ 1,000	0
Occupancy Costs		$ 5,000	$ 5,000	$ 5,000	0
INCOME BEFORE TAXES		$ 30,730		$ 63,765
Taxes Rate	40%	$ 12,292		$ 25,506
NET INCOME		$ 18,438		$ 38,259