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Before franchising her Global Chopsticks restaurant concept, owner Lei Wong had made the following assumptions (Click the icon to view the assumptions.) (Click the icon to view more information.) Read the requirements CETTESD 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 $6,500 per month? Show your calculations. Identify the formula labels and compute the operating income after the changes. Times: Contribution margin Less:
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 $6,500 per month? Show your 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 $6,500 per month.
that mont s and i More info Wong believed people would pay $6.00 for a large bowl of noodles. Variable costs would be $2.10 a bowl creating a contribution margin of $3.90 per bowl. Lei Wong estimated monthly fixed costs for franchisees at $7,800. Franchisees wanted a minimum monthly operating income of $6,500. Print Done X franchisees still earn their
suming that O per mont abels and d gin More Info More info Wong did franchise her restaurant concept. Because of Global Chopsticks' success, Fresh Noodles has come on the scene as a competitor. To maintain its market share, Global Chopsticks will have to lower its sales price to $5.50 per bowl. At the same time, Global Chopsticks hopes to increase each restaurant's volume to 5,000 bowls per month by embarking on a marketing campaign. Each franchise will have to contribute $600 per month to cover the advertising costs. Prior to these changes, most locations were selling 4,500 bowls per month. Print Done - X franchisees still earn their
ments uming that O per mont abels and d in - X Requirements 1. What was the average restaurant's operating income before these changes? 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 $6,500 per month? Show your calculations. Print Done e franchisees still earn their
- X More info nd d Wong believed people would pay $6.00 for a large bowl of noodles. Variable costs would be $2.10 a bowl creating a contribution margin of $3.90 per bowl. Lei Wong estimated monthly fixed costs for franchisees at $7,800. Franchisees wanted a minimum monthly operating income of $6,500. Print Done that month and compute the operating income after the changes the e franchisees still earn the
Id at nt More Info - More info Wong did franchise her restaurant concept. Because of Global Chopsticks success, Fresh Noodles has come on the scene as a competitor. To maintain its market share, Global Chopsticks will have to lower its sales price to $5.50 per bowl. At the same time, Global Chopsticks hopes to increase each restaurant's volume to 5,000 bowls per month by embarking on a marketing campaign. Each franchise will have to contribute $600 per month to cover the advertising costs. Prior to these changes, most locations were selling 4,500 bowls per month. Print Done - X e franchisees still earn t
10 ad c hat ont Requirements - X 1. What was the average restaurant's operating income before these changes? 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 $6,500 per month? Show your calculations. Print Done e franchisees still ea