Question

Owner Shan LoShan Lo is considering franchising her Oriental JoyOriental Joy restaurant concept. She believes people will pay $ 6.50$6.50 for a large bowl of noodles. Variable costs are $ 1.95$1.95 a bowl. LoLo estimates monthly fixed costs for franchisees at $ 8 comma 400$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 LoLo if franchisees want a minimum monthly operating income of $ 7 comma 000$7,000 and LoLo believes most locations could generate $ 28 comma 000$28,000 in monthly sales?

          Owner Shan LoShan Lo is considering franchising her Oriental JoyOriental Joy restaurant concept. She believes people will pay $ 6.50$6.50 for a large bowl of noodles. Variable costs are $ 1.95$1.95 a bowl. LoLo estimates monthly fixed costs for franchisees at $ 8 comma 400$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 LoLo if franchisees want a minimum monthly operating income of $ 7 comma 000$7,000 and LoLo believes most locations could generate $ 28 comma 000$28,000 in monthly sales?

Added by Colleen P.

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