1. Prepare a contribution margin income statement using the

1. Prepare a contribution margin income statement using the given financial data.Use the following format:SalesVariable costsCost of salesOperatingTotal variable costsContribution marginFixed costsOperatingAdministrativeTotal fixed costsNet operating income2. Compute the break-even volume of the number of lunches and dinners. Assumethat the CM% for each meal category is the same as the average CM% as calculatedin #1. Hint: To solve a break even sales mix, use the horizontal formula:Net operating income = ($Sales – $Variable costs) – $fixed costsNet operating income = $CM – $fixed costsAt Breakeven, NOI = $0Therefore, $CM = $ Fixed costsNow solve for the unit $CM for each item. Let X be the number of dinners, 2X thenumber of lunches. $CM is the combined total of the $CM for dinners, and the $CMfor lunches.5. In order to increase NOI, the owner of the restaurant is considering adjustments to the qualityof food ingredients currently used. Rather than using premium ingredients, use of averagequality ingredients would reduce the cost of food by 10%. The owner proposes to not changethe current meal pricing. As the consultant, prepare a memo to the owner that presents thepros and cons of this change in operations. What are the potential impacts on revenue, costs,and net operating income may result from this change? The owner does not want to see adecrease in net operating income. Could the owner make this change and absorb a decrease incustomers, and how would you demonstrate numerically to support your analysis? What otherfactors or consequences of this decision should the owner consider besides the financial impact