Chapter 10, Question 1. a.

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Boniso operates Boniso’s Mexican Restaurant in an urban city in the South. He has worked hard at setting up cost control systems, and he is generally happy with his overall results. However, he is not sure if all of his menu items are providing profitability for his restaurant. He decides to use food cost matrix and contribution margin matrix analyses to study each of his menu items. a. Complete his menu analysis worksheet. Menu Analysis Worksheet Menu Item Fajita Plate Enchilada Dinner Menudo Mexican Salad Chalupa Dinner Burrito Dinner Taco Dinner Total Weighted Average Chapter 10 Q 1.a. Item Total Number Selling Contribution Contribution Food Sold Price Total Sales Item Cost Total Cost Margin Margin Cost % 147 $12.95 $1,903.65 $4.92 $723.24 $8.03 $1,180.41 38% 200 $9.95 $1,990.00 $3.48 $696.00 $6.47 $1,294.00 35% 82 $6.95 $569.90 $1.74 $142.68 $5.21 $427.55 25% 117 $7.95 $930.15 $2.39 $279.63 $5.56 $650.52 30% 125 $8.95 $1,118.75 $2.51 $313.75 $6.44 $805.00 28% 168 $9.95 $1,671.60 $3.25 $546.00 $6.70 $1,125.60 33% 225 $5.95 $1,338.75 $1.55 $348.75 $4.40 $990.00 26% 1,064 $9,522.80 $3,050.05 $6,473.08 152 $8.95 $1,360.40 $2.87 $435.72 $6.08 $924.73 32% Chapter 10, Question 1. b. Using the results of Boniso’s menu analysis worksheet (in part a), fill in the appropriate average food cost, popularity, and contribution margin in the blanks below. Then, place the menu items in the appropriate squares in the matrices. Food Cost Matrix High Food Cost % (Above 32 %) fajita enchilada, burrito menudo, mexican salad, chalupa taco Low Popularity (Below 152 Sales) High Popularity (Above 152 Sales) High Contribution Margin (Above $ 6.08 ) fajita, chalupa enchilada, burrito Low Contribution Margin (Below $ 6.08 ) menudo, mexican salad taco Low Popularity (Below 152 Sales) High Popularity (Above 152 Sales) Low Food Cost % (Below 32 %) Contribution Margin Matrix Chapter 10 Q 1.b. Chapter 10, Question 2 Garikai is a manager at Boniso’s Mexican Restaurant (from the previous question), and he believes that goal value analysis, rather than Boniso’s matrix analysis, is a better way to study the profitability of his menu items. a. Using the following goal value analysis data, help Garikai analyze the restaurant’s menu items. 2.a. After computing the following goal values, sort (in descending rank order) by goal value. Be sure to include the overall menu in the appropriate rank order. Spreadsheet hint: Calculate the goal values by placing the ENTIRE Goal Value formula for each item in the Goal Value column as follows: (1 − Food Cost %) × Item Popularity × Selling Price × (1 − (Variable Cost % + Food Cost %)). The table will not sort correctly if partial calculations for Goal Value exist in columns A, B, C, or D. For example, DO NOT calculate (1 − Food Cost %) in the A column or (1 − (Variable Cost % + Food Cost %)) in the D column. Goal Value Analysis Results Item Fajita Plate Enchilada Dinner Menudo Mexican Salad Chalupa Dinner Burrito Dinner Taco Dinner Overall Menu (Goal Value) Food Cost % Number Selling Variable Cost % (in decimal form) Sold Price (in decimal form) 0.38 147 $12.95 0.28 0.35 200 $9.95 0.28 0.25 82 $6.95 0.28 0.30 117 $7.95 0.28 0.28 125 $8.95 0.28 0.33 168 $9.95 0.28 0.26 225 $5.95 0.28 0.32 152 $8.95 0.28 2.b. b. After analyzing his menu items, Garikai believes he can improve the chalupa dinner by lowering the selling price to $8.55. He believes that this lower price will increase number of chalupa dinners sold to 150. However, the change in price will increase both his food cost percentage and variable cost percentage to 29 percent for the chalupa dinner. Results of Changes Made to Chalupa Dinner Item "A" "B"

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Boniso operates Boniso’s Mexican Restaurant in an urban city in the South. He has worked hard at setting up cost control systems, and he is generally happy with his overall results. However, he is not sure if all of his menu items are providing profitability for his restaurant. He decides to use food cost matrix and contribution margin matrix analyses to study each of his menu items. a. Complete his menu analysis worksheet. Menu Analysis Worksheet Menu Item Fajita Plate Enchilada Dinner Menudo Mexican Salad Chalupa Dinner Burrito Dinner Taco Dinner Total Weighted Average Chapter 10 Q 1.a. Item Total Number Selling Contribution Contribution Food Sold Price Total Sales Item Cost Total Cost Margin Margin Cost % 147 $12.95 $1,903.65 $4.92 $723.24 $8.03 $1,180.41 38% 200 $9.95 $1,990.00 $3.48 $696.00 $6.47 $1,294.00 35% 82 $6.95 $569.90 $1.74 $142.68 $5.21 $427.55 25% 117 $7.95 $930.15 $2.39 $279.63 $5.56 $650.52 30% 125 $8.95 $1,118.75 $2.51 $313.75 $6.44 $805.00 28% 168 $9.95 $1,671.60 $3.25 $546.00 $6.70 $1,125.60 33% 225 $5.95 $1,338.75 $1.55 $348.75 $4.40 $990.00 26% 1,064 $9,522.80 $3,050.05 $6,473.08 152 $8.95 $1,360.40 $2.87 $435.72 $6.08 $924.73 32% Chapter 10, Question 1. b. Using the results of Boniso’s menu analysis worksheet (in part a), fill in the appropriate average food cost, popularity, and contribution margin in the blanks below. Then, place the menu items in the appropriate squares in the matrices. Food Cost Matrix High Food Cost % (Above 32 %) fajita enchilada, burrito menudo, mexican salad, chalupa taco Low Popularity (Below 152 Sales) High Popularity (Above 152 Sales) High Contribution Margin (Above $ 6.08 ) fajita, chalupa enchilada, burrito Low Contribution Margin (Below $ 6.08 ) menudo, mexican salad taco Low Popularity (Below 152 Sales) High Popularity (Above 152 Sales) Low Food Cost % (Below 32 %) Contribution Margin Matrix Chapter 10 Q 1.b. Chapter 10, Question 2 Garikai is a manager at Boniso’s Mexican Restaurant (from the previous question), and he believes that goal value analysis, rather than Boniso’s matrix analysis, is a better way to study the profitability of his menu items. a. Using the following goal value analysis data, help Garikai analyze the restaurant’s menu items. 2.a. After computing the following goal values, sort (in descending rank order) by goal value. Be sure to include the overall menu in the appropriate rank order. Spreadsheet hint: Calculate the goal values by placing the ENTIRE Goal Value formula for each item in the Goal Value column as follows: (1 − Food Cost %) × Item Popularity × Selling Price × (1 − (Variable Cost % + Food Cost %)). The table will not sort correctly if partial calculations for Goal Value exist in columns A, B, C, or D. For example, DO NOT calculate (1 − Food Cost %) in the A column or (1 − (Variable Cost % + Food Cost %)) in the D column. Goal Value Analysis Results Item Fajita Plate Enchilada Dinner Menudo Mexican Salad Chalupa Dinner Burrito Dinner Taco Dinner Overall Menu (Goal Value) Food Cost % Number Selling Variable Cost % (in decimal form) Sold Price (in decimal form) 0.38 147 $12.95 0.28 0.35 200 $9.95 0.28 0.25 82 $6.95 0.28 0.30 117 $7.95 0.28 0.28 125 $8.95 0.28 0.33 168 $9.95 0.28 0.26 225 $5.95 0.28 0.32 152 $8.95 0.28 2.b. b. After analyzing his menu items, Garikai believes he can improve the chalupa dinner by lowering the selling price to $8.55. He believes that this lower price will increase number of chalupa dinners sold to 150. However, the change in price will increase both his food cost percentage and variable cost percentage to 29 percent for the chalupa dinner. Results of Changes Made to Chalupa Dinner Item "A" "B"

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