Question

Owner Shan Lo is considering franchising her Noodles by Lo restaurant concept. She believes people will pay $6.50 for a large bowl of noodles. Variable costs are $3.25 per bowl. Lo estimates monthly fixed costs for a franchise at $3,000.
Requirements
1. Use the contribution margin ratio approach to find a franchise’s breakeven sales in dollars.
2. Lo believes most locations could generate $34,500 in monthly sales. Is franchising a good idea for Lo if franchisees want a minimum monthly operating income of $13,500?


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  • CreatedJune 15, 2015
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