**Title: Calculating Breakeven Sales for a Franchise****Overview:**Owner Yang Wong is considering franchising her Noodle Time restaurant concept. She anticipates that customers will pay $6.50 for a large bowl of noodles. The variable costs incurred are $1.95 per bowl. Wong estimates that the fixed monthly costs for franchisees are $8,400.**Objective:**Find a franchisee's breakeven sales in dollars using the contribution margin approach.**Instructions:**Begin by identifying the formula to compute sales in units at various levels of operating income using the contribution margin approach.**Formula:**\[ \text{Breakeven Sales in Dollars} = \left( \text{Fixed Costs} \right) \div \text{Contribution Margin Ratio} \]**Steps:**1. Calculate the contribution margin per unit: \[ \text{Contribution Margin per Unit} = \text{Selling Price} - \text{Variable Cost} \]2. Determine the contribution margin ratio: \[ \text{Contribution Margin Ratio} = \frac{\text{Contribution Margin per Unit}}{\text{Selling Price}} \]3. Use the formula to find breakeven sales in dollars: \[ \text{Breakeven Sales} = \frac{\text{Fixed Costs}}{\text{Contribution Margin Ratio}} \] **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?**There are no graphs or diagrams present in the image.

The Break-even point indicates that total units are to be sold by the business entity to recover its…

Answered: Owner Yang Wong is considering…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Use the cvp and compute the sales revenue necessary to achieve an IBIT of $162,000 for a multi product restaurant with total fixed costs of $150,00 from the information Sales mix contribution margin food 60% 40% Beverage 40% 70%
Flavor Enterprises has been approached about providing a new service to its clients. The company will bill clients $160 per hour; the related hourly variable and fixed operating costs will be $70 and $18, respectively. If all employees are currently working at full capacity on other client matters and average hourly profit margin is $88, should the company accept this new services or not, use calculation to support your answer.
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Smelly Feet Co. produces sports socks. The company has fixed costs of $157,000 and variable costs of $0.80. Each package sells for $2.50.(Round your answers to two decimal places when needed and use rounded answers for all future calculations).1. Compute the contribution margin per package and the contribution margin ratio. 2. Find the break-even point in units and in dollars using the contribution margin approach. (Reminder to write answer in whole units).
Joey Bag-o-donuts owns an ice cream shop. Looking at last year's utility bills, the highest utility bill was $4000 for 2000 machine hours. The lowest utility bill was $2500 for 1200 machine hours. Calculate the variable rate per machine hour and the total fixed utility cost. Show the equation for determining total utility costs. If Joey plans on using 1500 machine hours, what will the total utility bill be using the equation in part 2.
Allison Arkin sells homemade knit scarves for $25 each at local craft shows. Her contribution margin ratio is 60%. Currently, the craft show entrance fees cost Allison $900 per year. The craft shows are raising their entrance fees by 20% next year. How many extra scarves will Allison have to sell next year just to pay for rising entrance fee costs? Begin by identifying the general formula to compute the breakeven sales in units. + = Breakeven sales in units
Liberty Coffee sells three small coffees for every large coffee. A small coffee sells for $3.00, with a variable expense of $1.50. A large coffee sells for $5.00, with a variable expense of $2.50.Requirements1. Determine the coffee shop’s monthly breakeven point in the numbers of small coffees and large coffees. Prove your answer by preparing a summary contribution margin income statement at the breakeven level of sales. Show only two categories of expenses: variable and fixed.2. Compute the coffee shop’s margin of safety in dollars.3. Use the coffee shop’s operating leverage factor (using the July contribution margin income statement) to determine its new operating income if sales volume increases 12%. Prove your results using the contribution margin income statement format. Assume that sales mix remains unchanged.
Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $200,000 per year. Its operating results for last year were as follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use the CM ratio to determine the break-even point in dollar sales. 3. Assume this year's unit sales and total sales increase by 59,000 units and $2,360,000, respectively. If the fixed expenses do not change, how much will net operating income increase? $ 1,000,000 500,000 500,000 200,000 $ 300,000 4-a. What is the degree of operating leverage based on last year's sales? 4-b. Assume the president expects this year's unit sales to increase by 19%. Using the degree of operating leverage from last year, what percentage increase in net operating income will the…
The manager of a car wash must decide whether to have one or two wash lines. One line will mean a fixed cost of $5,600 a month, and two lines will mean a fixed cost of $9,520 a month. Each line would be able to process 15 cars an hour. Variable costs will be $3 per car, and revenue will be $5.95 per car. The manager projects an average demand of between 14 and 18 cars an hour. Would you recommend one or two lines? The car wash is open 280 hours a month.. Choose line
Please help to solve the question by giving the correct answers and explanation. Thank you!. please answer all
You are opening a coffee shop. You estimate the weekly costs of $375 for rent, $2100 for employee costs, and $125 for miscellaneous costs. The ingredients and material cost for each cup of coffee is 0.35 (cents) per cup. 1) Create a cost function for the coffee shop. 2) If the investors estimate that they will be able to sell 1100 cups of coffee per week. How much should they charge per cup to make a profit? Justify your answer and/or explain.
can you help me with the last two questions, please

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