The assignment is about opening a restaurant and the information given is cost of staff and no. of meals sold the last six months.
I have calculated by using the high-low method that variable labour cost per meal is 0.40£ and that the Fixed labour cost is £7,333.
To find the annual fixed labour cost I assume that I take the 7,333 x 12 - correct ?
Next question is to produce a summary of the estimated annual income and expenditure in a marginal costing format.
Question: To find the contribution first I find sales revenue 702,000 and withdraw the variable cost (information given as the total cost of meals served) 312,000 BUT do I also calculate the no. of meals per year (260,000) x 0.40 = 104,000 and withdraw as a variable cost?
And then to find the net profit do I then take the annual fixed labour cost of 88,000 and withdraw together with other fixed costs ??
I cannot get any further before I have these informations to calculate break even point etc.