During 2013,the JKL Restaurant had sales revenues and food costs of $800,000 and $600,000,respectively.During 2014,JKL 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 2013 are expected to increase by

Question

Quizplus · Accepted Answer

To calculate the increase in operating profits, we need to subtract the increased food costs from the increased sales revenues and then subtract that result from the 2013 operating profit.

Increase in operating profit = 2013 operating profit + (increase in sales revenues - increase in food costs)

= $800,000 - $600,000 + ($100,000 - $40,000)

= $60,000

Therefore, the increase in operating profits for 2013 is $60,000. Therefore, the best choice is C.

During 2013,the JKL Restaurant Had Sales Revenues and Food Costs