During 2016,the Beach Restaurant had sales revenues and food costs of $800,000 and $600,000,respectively.During 2017,Beach plans to introduce a new menu item that is expected to increase sales revenues by $100,000 and food costs by $40,000.Assuming no changes are expected for the other food items,operating profits for 2017 are expected to increase by

Question

Quizplus · Accepted Answer

The increase in sales revenue from the new menu item is $100,000. However, the cost of the food for the new menu item is $40,000.

Therefore, the increase in operating profit is:

$100,000 - $40,000 = $60,000.

Thus, the operating profits for 2017 are expected to increase by $60,000.

During 2016,the Beach Restaurant Had Sales Revenues and Food Costs