Owner Yang Wong is considering franchising her Noodle Time restaurant concept. She believes people will pay $6.50 for a large bowl of noodles. Variable costs are $1.95 a bowl. Wong estimates monthly fixed costs for franchisees at $8,400. Read the requirements. Requirement 1. Find a franchisee's breakeven sales in dollars. Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( Fixed expenses Operating income ) + Contribution margin ratio Breakeven sales in dollars + C……. The breakeven sales in dollars is
Owner Yang Wong is considering franchising her Noodle Time restaurant concept. She believes people will pay $6.50 for a large bowl of noodles. Variable costs are $1.95 a bowl. Wong estimates monthly fixed costs for franchisees at $8,400. Read the requirements. Requirement 1. Find a franchisee's breakeven sales in dollars. Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ( Fixed expenses Operating income ) + Contribution margin ratio Breakeven sales in dollars + C……. The breakeven sales in dollars is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Owner Yang Wong is considering franchising her Noodle Time restaurant concept. She believes people will pay $6.50 for a large bowl of noodles. Variable costs are $1.95 a
bowl. Wong estimates monthly fixed costs for franchisees at $8,400.
Read the requirements.
Requirement 1. Find a franchisee's breakeven sales in dollars.
Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach.
Fixed expenses
Operating income
) ÷
Contribution margin ratio = Breakeven sales in dollars
+
The breakeven sales dollars is
C
Requirements
1. Find a franchisee's breakeven sales in dollars.
2. Is franchising a good idea for Wong if franchisees want a minimum monthly
operating income of $7,000 and Wong believes that most locations could
generate $26,000 in monthly sales?
- X
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