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EXHIBIT 1: YALLA MOMOS INCOME STATEMENT FOR THE YEAR ENDING 2015 (IN AED) Net Revenue 504,000 Expenses Cost of food sales 151,200 Rent 68,000 Salaries

EXHIBIT 1: YALLA MOMOS INCOME STATEMENT FOR THE YEAR ENDING 2015 (IN AED)

Net Revenue

504,000

Expenses

Cost of food sales

151,200

Rent

68,000

Salaries

54,000

Administrative costs

23,000

Depreciation

30,200

Utilities

13,000

Miscellaneous expenses

15,800

Advertising costs

0

Interest

13,000

Net Profit

135,800

EXHIBIT 2: YALLA MOMOS PROJECTIONS FOR THE YEAR 2016 (IN AED)

Without expansion

With expansion

Rent

75,000

88,000

Salaries

61,400

75,000

Administrative costs

26,000

34,000

Depreciation

34,720

38,360

Utilities

14,000

19,000

Miscellaneous expenses

17,060

19,180

Advertising costs

8,000

12,000

Interest

13,000

16,000

Source: Company documents, Ivey publications

Required:

  1. Elaborate on the relevant factors that need to be considered when deciding to expand. (200 words)
  2. How can companies like Yalla Momos benefit from CVP analysis? Calculate the 2015 BEP and Margin of safety (MOS) in quantity and monetary terms. (150 words)

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