Question

Owner Sunny Chadha is considering franchising her Oriental Express restaurant concept.
She believes people will pay $5.50 for a large bowl of noodles. Variable costs are $2.75 a bowl. Chadha estimates monthly fixed costs for franchisees at $8,750.
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 Chadha if franchisees want a minimum monthly operating income of $3,500 and Chadha believes most locations could generate $24,000 in monthly sales?


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  • CreatedApril 30, 2015
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