E7-21 Find breakeven and target profit volume Owner Lei Wong is considering franchising her Global Chopsticks restaurant concept. She believes people will pay $5.75 for a large bowl of noodles. Var

E7-21 Find breakeven and target profit volume

Owner Lei Wong is considering franchising her Global Chopsticks restaurant concept. She believes people will pay $5.75 for a large bowl of noodles. Variable costs are $2.30 a bowl. Wong estimates monthly fixed costs for franchisees at $8,400.

Requirements:

1. Find a franchisee’s breakeven sales in dollars.

2. Is franchising a good idea for Wong if franchisees want a minimum monthly operating income of $6,000 and Wong believes that most locations could generate $26,000 in monthly sales?

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