Question

Owner Shan Lo is considering franchising her Happy Wok restaurant concept. She believes people will pay $5 for a large bowl of noodles. Variable costs are $1.50 a bowl. Lo estimates monthly fixed costs for franchisees at $8,400.
Requirements
1. Use the contribution margin ratio shortcut approach to find a franchisee’s break-even sales in dollars.
2. Is franchising a good idea for Lo if franchisees want a minimum monthly operating income of $8,750 and Lo believes that most locations could generate $25,000 in monthly sales?


$1.99
Sales3
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  • CreatedApril 30, 2015
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