Local Smoke is a new start-up restaurant selling chicken wings. They currently operate as a ghost kitchen by renting space in an existing restaurant but want to see if they should rent a freestanding space of their own. They sell the wings for $15.00 per dozen. Their variable expenses are 35%. They currently rent space for $300 per month. They believe the business will grow and they will eventually need to move locations.

1) Calculate the contribution margin, CM ratio and break-even point, in dozens of wings, for their current situation (ghost kitchen).

2) How many dozen wings would they have to sell to reach a target profit of $3,000 per month? Local Smoke has decided to rent space in a local strip mall. This space will rent for $4,000 per month however the owners feel this new location would dramatically increase their sales.

3) Based on this new location, calculate the contribution margin, CM ratio and break-even point in dozen of wings.

4) How many dozen wings would they have to sell to reach a target profit of $5,000 per month?