Melinda is a potential franchisee of Subway Sandwich Shop Inc. (SSS) and is in the process...
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Melinda is a potential franchisee of Subway Sandwich Shop Inc. (SSS) and is in the process of developing a business plan to present to potential investors. Following are various projected cost data for the operation: Lease of store space License Utilities Advertising Royalty $500/month $300/year $400/month Equip, lease Salaries Insurance 2.5% gross sales revenue 8% of gross sales revenue The average order sells for $4, with food cost of $2. 2. What is the contribution of each sale toward covering fixed expenses? 3. What is the projected monthly break-even point in units? $500/month $2,000/month $1,800/year 4. The potential franchisee has a target before-tax net profit of $2,000 per month. What level of sales (in units and in dollars) must be achieved? 5. The potential franchisee has a target after-tax profit of $2,400 per month. What level of sales (in units) must be achieved? Assume a tax rate of 25%. Melinda is a potential franchisee of Subway Sandwich Shop Inc. (SSS) and is in the process of developing a business plan to present to potential investors. Following are various projected cost data for the operation: Lease of store space License Utilities Advertising Royalty $500/month $300/year $400/month Equip, lease Salaries Insurance 2.5% gross sales revenue 8% of gross sales revenue The average order sells for $4, with food cost of $2. 2. What is the contribution of each sale toward covering fixed expenses? 3. What is the projected monthly break-even point in units? $500/month $2,000/month $1,800/year 4. The potential franchisee has a target before-tax net profit of $2,000 per month. What level of sales (in units and in dollars) must be achieved? 5. The potential franchisee has a target after-tax profit of $2,400 per month. What level of sales (in units) must be achieved? Assume a tax rate of 25%.
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Lets calculate the various financial aspects for Melindas Subway Sandwich Shop Inc SSS franchise 1 Contribution Margin per Sale Contribution Margin pe... View the full answer
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Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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