Annual planning at the Sporting Life Restaurant estimates nonfood costs at $220,000, sets required profit at $17,200, and projects that 58,000 guests will be served during the upcoming year. What would be the average contribution margin required per guest during the upcoming year?

Question

Quizplus · Accepted Answer

The contribution margin per guest can be calculated using the following formula:

Contribution Margin per Guest = (Nonfood Costs + Required Profit) / Number of Guests

Substituting the given values:

Contribution Margin per Guest = ($220,000 + $17,200) / 58,000

Contribution Margin per Guest = $237,200 / 58,000

Contribution Margin per Guest = $4.09

Therefore, the average contribution margin required per guest during the upcoming year is $4.09, which is closest to option C, $4.09.

Annual Planning at the Sporting Life Restaurant Estimates Nonfood Costs