Before franchising her Oriental Express restaurant concept, owner Jackie Lo Woo had made the following assumptions. i (Click the icon to view the assumptions.) (Click the icon to view more information.) Read the requirements. More info 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. Woo believed people would pay $6.25 for a large bowl of noodles. Variable costs would be $2.50 a bowl creating a contribution margin of $3.75 per bowl. Jackie Lo Woo estimated monthly fixed costs for franchisees at $8,250. Franchisees wanted a minimum monthly operating income of $6,600. Times: Contribution margin Less: Operating income Print Done 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 $6,600 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 $6,600 per month. More info Woo did franchise her restaurant concept. Because of Oriental Express' success, Noodles Plus has come on the scene as a competitor. To maintain its market share, Oriental Express will have to lower its sales price to $5.75 per bowl. At the same time, Oriental Express hopes to increase each restaurant's volume to 8,000 bowls per month by embarking on a marketing campaign. Each franchise will have to contribute $400 per month to cover the advertising costs. Prior to these changes, most locations were selling 7,500 bowls per month. Print Done