Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customers—food from the restaurant segment and freshly brewed beer from the beer production segment. Both segments are typically in the same building, which allows customers to see the beer-brewing process. After months of research, the owners created a financial model that showed the following projections for the first year of operations: Sales Beer sales$ 861,200Food sales1,184,150Other sales 107,650Total sales$ 2,153,000Less cost of sales579,158Gross margin$ 1,573,842Less marketing and administrative expenses1,155,430Operating profit$ 418,412 In the process of pursuing capital through private investors and financial institutions, RBC was approached with several questions. The following represents a sample of the more common questions asked: What is the break-even point? What sales dollars will be required to make $400,000? To make $700,000? Is the product mix reasonable? (Beer tends to have a higher contribution margin ratio than food, and therefore product mix assumptions are critical to profit projections.) What happens to operating profit if the product mix shifts? How will changes in price affect operating profit? How much does a pint of beer cost to produce? It became clear to the owners of RBC that the initial financial model was not adequate for answering these types of questions. After further research, RBC created another financial model that provided the following information for the first year of operations. Sales Beer sales (40% of total sales)$ 861,200 Food sales (55% of total sales)1,184,150 Other sales (5% of total sales)107,650 Total sales $ 2,153,000Variable Costs Beer (15% of beer sales)$ 129,180 Food (35% of food sales)414,453 Other (33% of other sales)35,525 Wages of employees (25% of sales)538,250 Supplies (1% of sales)21,530 Utilities (3% of sales)58,890 Other: credit card, miscellaneous (2% of sales)39,260 Total variable costs 1,237,088Contribution margin $ 915,912Fixed Costs Salaries: manager, chef, brewer$ 99,500 Maintenance32,000 Advertising22,000 Other: cleaning, menus, miscellaneous42,000 Insurance and accounting50,000 Property taxes26,000 Depreciation104,000 Debt service (interest on debt)122,000 Total fixed costs 497,500Operating profit $ 418,412 Required: Perform a sensitivity analysis by answering the following questions: What is the break-even point in sales dollars for RBC? What is the margin of safety for RBC? What sales dollars would be required to achieve an operating profit of $400,000? $700,000?