owner sue lan wn er ue Lan is considering ranchising her Noodles or a Lan restau
ID: 2562851 • Letter: O
Question
owner sue lan
wn er ue Lan is considering ranchising her Noodles or a Lan restauran concep he be eves peop e iill pay S 00 or a large bo at $16,500 Requirements 1. Use the contribution margin ratio approach to find a franchise's breakeven sales in dollans 2. Lan believes most locations could generate $57,000 in monthly sales. Is franchising a good idea for Lan if franchisees want a o noodles. Va a costs are 200 per bow Lan estimates month xe costs or a ranch minimum monthly operating income of $16,500? 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.) Required sales in dollars )1 )1 = Requirement 2. Lan believes most locations could generate $57,000 in monthly sales. Is franchising a good idea for Lan if franchisees want a minimum monthly operating income of $16,500? 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 $16,500. (Abbreviation used: CMcontribution margin.) )1 Required sales in dollars )1 Choose from any list or enter any number in the input fields and then continue to the next question. Is franchising a good idea for Lan if franchisees want a minimum monthly operating income of $16,500? Since the predicted monthly sales of $7.000 are the amount of sales necessary to generate a minimum monthly operating income of $16.500 Lan's franchising conceptgood idea ' the amount of sales necessary to generate a minimum monthly operating income of S155 Lan's ranch sing concept a good ideaExplanation / Answer
Answer to Requirement 1:
Computation of Contribution Margin Ratio
Selling Price
5
Less: Variable Costs
2
Contribution Margin
3
Contribution Margin Ratio ([3/5]*100)
60%
(Fixed Costs
+
Target Profit)
/
Contribution Margin Ratio
=
Required sales in dollars
(16500
+
0)
/
60%
=
27500
Answer to Requirement 2:
(Fixed Costs
+
Target Profit)
/
Contribution Margin Ratio
=
Required sales in dollars
(16500
+
16500)
/
60%
=
55000
Since, the predicted monthly sales of $ 57000 are greater than the amount of sales necessary to generate a minimum monthly operating Income of $ 16500. Lans Franchising concept is a good Idea
Answer to Requirement 1:
Computation of Contribution Margin Ratio
Selling Price
5
Less: Variable Costs
2
Contribution Margin
3
Contribution Margin Ratio ([3/5]*100)
60%
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