A Restaurant Owner Set Her Menu Prices at a Defined

question 60

Short Answer

A restaurant owner set her menu prices at a defined percentage of her input costs for food, ingredients, and beverages. The prices as a percentage of these costs are 300% for appetizers, 200% for entrees, 225% for desserts, and 250% for beverages. The restaurant's revenue breaks down as follows: 10% from appetizers, 50% from entrees, 25% from beverages, and 15% from desserts. On average, what are menu prices as a percentage of the basic input costs? Overall, what are the input costs as a percentage of revenue?

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Definitions:

Insurance

A financial product that provides protection against losses or damages, typically in the form of a policy for which the insured pays a premium.

Residual Value

The calculated estimate of what an asset will be worth when it reaches the end of its functional life.

Straight-Line Depreciation

Straight-line depreciation is a method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Book Value

The value of an asset as it appears on the balance sheet, determined by cost minus accumulated depreciation.