Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $5.00 for a large bowl of noodles. Variable costs are $2.00 per bowl. Low estimates monthly fixed costs for a franchise at $4,500. Read the requirements. Requirement 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars using the contribution margin approach. (Enter a "0" for any zero balances. Abbreviation used: CM = contribution margin.) ( + + ) + ) + + + % Requirement 2. Low believes most locations could generate $60,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000? Explain your answer. ) + = Required sales in dollars Begin by showing the formula and then entering the amounts to calculate the targeted sales dollars required to earn the minimum monthly operating income of $24,000. (Abbreviation used: CM = contribution margin.) = % C = Required sales in dollars = Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000? Explain your answer. Since the predicted monthly sales of $60,500 are good idea. the amount of sales necessary to generate a minimum monthly operating income of $24,000, Low's franchising concept a
Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $5.00 for a large bowl of noodles. Variable costs are $2.00 per bowl. Low estimates monthly fixed costs for a franchise at $4,500. Read the requirements. Requirement 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars using the contribution margin approach. (Enter a "0" for any zero balances. Abbreviation used: CM = contribution margin.) ( + + ) + ) + + + % Requirement 2. Low believes most locations could generate $60,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000? Explain your answer. ) + = Required sales in dollars Begin by showing the formula and then entering the amounts to calculate the targeted sales dollars required to earn the minimum monthly operating income of $24,000. (Abbreviation used: CM = contribution margin.) = % C = Required sales in dollars = Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000? Explain your answer. Since the predicted monthly sales of $60,500 are good idea. the amount of sales necessary to generate a minimum monthly operating income of $24,000, Low's franchising concept a
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 8PB: Colin OShea has a carpentry shop that employs 4 carpenters. Colin received an order for 1,000 coffee...
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Transcribed Image Text:Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $5.00 for a large bowl of noodles. Variable costs are $2.00 per bowl. Low estimates
monthly fixed costs for a franchise at $4,500.
Read the requirements.
Requirement 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars.
Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars using the contribution margin approach. (Enter a "0" for any zero balances. Abbreviation
used: CM = contribution margin.)
(
+
+
) +
) +
+
+
%
Requirement 2. Low believes most locations could generate $60,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000?
Explain your answer.
Begin by showing the formula and then entering the amounts to calculate the targeted sales dollars required to earn the minimum monthly operating income of $24,000. (Abbreviation used: CM =
contribution margin.)
) +
= Required sales in dollars
%
C
= Required sales in dollars
=
Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $24,000? Explain your answer.
Since the predicted monthly sales of $60,500 are
good idea.
the amount of sales necessary to generate a minimum monthly operating income of $24,000, Low's franchising concept
a
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