Marcia curtis is the vice president of development for Tamales to go a rapidly expanding chain of resturant featuring take tamales and other mexican food specialties. Currently, the chain has 150 units and average unit volume is $800,000 per year. Annual per-unit revenue growth for opened units is 5 percent per year.Tonya Gonzalez, the chain's president, has promised company stockholders the chain will experience 12 percent overall reveue growth in the next year. Assuming that per-unit growth on existing units continues to average 5 percent, calculate how many total operating units Marcia will need to have open next year to meet Tonya's goal of a 12 percent overall increase in the chain's revenue.Total Revenue-$120,000,000Per Unit Revenue-$800,000Total Number of Units- 150

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Asked Feb 9, 2020
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Marcia curtis is the vice president of development for Tamales to go a rapidly expanding chain of resturant featuring take tamales and other mexican food specialties. Currently, the chain has 150 units and average unit volume is $800,000 per year. Annual per-unit revenue growth for opened units is 5 percent per year.

Tonya Gonzalez, the chain's president, has promised company stockholders the chain will experience 12 percent overall reveue growth in the next year. Assuming that per-unit growth on existing units continues to average 5 percent, calculate how many total operating units Marcia will need to have open next year to meet Tonya's goal of a 12 percent overall increase in the chain's revenue.

Total Revenue-$120,000,000

Per Unit Revenue-$800,000

Total Number of Units- 150

 

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Expert Answer

Step 1

Given per unit revenue growth is 5 %.

Given revenue is $800,000.

So the revenue for next year = $800,000 × 1.05

                                              = $840,000.

Step 2

Given total revenue growth is 12 %.

Given total revenue is $120,000,000.

So, target revenue for next year = $120,000,000 × 1.12

                 ...

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