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Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $ 5.00 for a large bowl of noodles. Variable costs are $ 2.00 per bowl. Low estimates monthly fixed costs for a franchise at $ 3000

Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $ 5.00 for a large bowl of noodles. Variable costs are $ 2.00 per bowl. Low estimates monthly fixed costs for a franchise at $ 3000

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....
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Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $ 5.00 for a large bowl of noodles. Variable costs are $ 2.00 per bowl. Low estimates monthly fixed costs for a franchise at $ 3000
Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $5.00 for a large bowl of noodles. Variable costs are $2.00 per bowl. Low estimates monthly fixed costs for a franchise at $3,000. Read the requirements. Requirement 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars using the contribution margin approach. (Enter a "0" for any zero balances. Abbreviation used: CM = contribution margin.) (Fixed costs + Target profit ▼ CM ratio = Required sales in dollars ) + ) + ($ 3,000 + $ 0 60 = $ 5,000 C % + Requirement 2. Low believes most locations could generate $41,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $15,000? Explain your answer. Begin by showing the formula and then entering the amounts to calculate the targeted sales dollars required to earn the minimum monthly operating income of $15,000. (Abbreviation used: CM = contribution margin.) = )+ Required sales in dollars Requirements 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. 2. Low believes most locations could generate $41,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $15,000? Explain your answer. Print Done X
Transcribed Image Text:Owner Shirl Low is considering franchising her Noodles by Low restaurant concept. She believes people will pay $5.00 for a large bowl of noodles. Variable costs are $2.00 per bowl. Low estimates monthly fixed costs for a franchise at $3,000. Read the requirements. Requirement 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. Begin by showing the formula and then entering the amounts to calculate the breakeven point in sales dollars using the contribution margin approach. (Enter a "0" for any zero balances. Abbreviation used: CM = contribution margin.) (Fixed costs + Target profit ▼ CM ratio = Required sales in dollars ) + ) + ($ 3,000 + $ 0 60 = $ 5,000 C % + Requirement 2. Low believes most locations could generate $41,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $15,000? Explain your answer. Begin by showing the formula and then entering the amounts to calculate the targeted sales dollars required to earn the minimum monthly operating income of $15,000. (Abbreviation used: CM = contribution margin.) = )+ Required sales in dollars Requirements 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollars. 2. Low believes most locations could generate $41,500 in monthly sales. Is franchising a good idea for Low if franchisees want a minimum monthly operating income of $15,000? Explain your answer. Print Done X
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