What was the average restaurant's operating income before these changes? Assuming that the price cut and advertising campaign are successful at increasing volume to the projected level, will the franchisees still earn their target profit of $7,000 per month? Show your calculations. More info Fay believed people would pay $6.50 for a large bowl of noodles. Variable costs would be $1.95 a bowl creating a contribution margin of $4.55 per bowl. Kay Fay estimated monthly fixed costs for franchisees at $8,400. Franchisees wanted a minimum monthly operating income of $7,000. More info Fay did franchise her restaurant concept. Because of Oriental Joy' success, Noodles Galore has come on the scene as a competitor. To maintain its market share, Oriental Joy will have to lower its sales price to $6.00 per bowl. At the same time, Oriental Joy hopes to increase each restaurant's volume to 5,500 bowls per month by embarking on a marketing campaign. Each franchise will have to contribute $500 per month to cover the advertising costs. Prior to these changes, most locations were selling 5,000 bowls per month. - Before franchising her Oriental Joy restaurant concept, owner Kay Fay had made the following assumptions. Requirement 1. What was the average restaurant's operating income before these changes? Identify the formula labels and compute the operating income before the changes. Times: Contribution margin Less: Operating income Requirement 2. Assuming that the price cut and advertising campaign are successful at increasing volume to the projected level, will the franchisees still earn their target profit of $7,000 per month? Show you calculations. Identify the formula labels and compute the operating income after the changes. Times: Contribution margin Less: Operating income Cutting the sales price and advertising allow the franchise owners to earn their target profits of $7,000 per month. Identify the formula labels and compute the operating income after the changes. Times: Contribution margin will not Less: Operating income Cutting the sales price and advertising will allow the franchise owners to earn their target profits of $7,000 per month.