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8. Assume instead of one product (the Ripped Pig sandwich), Cat & Joes Pig Rig...

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Accounting

8. Assume instead of one product (the Ripped Pig sandwich), Cat & Joes Pig Rig served three items: 1. the Ripped Pig sandwich, which sells for $12 and had variable costs of 40% of sales price; 2. the Pork Taco, which sells for $9 and had variable costs of 35%; and 3. the Mac and Cheese Pulled Pork, which sells for $12 and had variable costs of 50%. Fixed costs were expected to remain at $10,000 per year (180 operational days) and income taxes were expected to be 20%. On a typical day, Cat and Joe would serve a total of 125 customers. The sales mix is as follows: 25 customers would order Mac and Cheese Pulled Pork, 25 would order Pork Tacos, and 75 would order the Ripped Pig sandwich.

8a) Complete an analysis showing the financial results for the above scenario. (Layout the revenue, variable cost and contribution margin for each item).

8b) Assuming the same sales mix as described above, if the entrepreneurs wish to earn a target profit of $100,000 after tax ($125,000 before tax), how many units of each item must be sold? (hint: calculate a per unit contribution analysis for each item and then an average contribution margin will need to be calculated, which is done by multiplying each of the CMs by the sales mix percentage). Show your work.

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