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Help with Requirment 2 Before franchising her Noodle Time restaurant concept, owner Yang Wong had made the following assumptions. ( i ) ( Click the
Help with Requirment Before franchising her Noodle Time restaurant concept, owner Yang Wong had made the following assumptions.
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Requirements
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What was the average restaurant's operating income before these changes?
Assuming that the price cut and advertising campaign are successful at
increasing volume to the projected level, will the franchisees still earn their target
Requirement What was the average restaurant's operating income before these changes?
profit of $ per month? Show your calculations.
Identify the formula labels and compute the operating income before the changes.
More info
Wong believed people would pay $ for a large bowl of noodles. Variable costs
would be $ a bowl creating a contribution margin of $ per bowl.
Yang Wong estimated monthly fixed costs for franchisees at $ Franchisees
wanted a minimum monthly operating income of $
Requirement Assuming that the price cut and advertising campaign are successful at increasing volume to the projected level, will the franchisees
Identify the formula labels and compute the operating income after the changes.
More info
Wong did franchise her restaurant concept. Because of Noodle Time's success,
Noodles More has come on the scene as a competitor. To maintain its
market share, Noodle Time will have to lower its sales price to $ per bowl. At
the same time, Noodle Time hopes to increase each restaurant's volume to
bowls per month by embarking on a marketing campaign. Each franchise will have
to contribute $ per month to cover the advertising costs. Prior to
these changes, most locations were selling bowls per month.
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