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1. Find a franchisee's breakeven sales in dollars. 2. Is franchising a good idea for Lo if franchisees want a minimum monthly operating income of $6,500 and Lo believes that most locations could generate $23,000 in monthly sales? Owner May Woo Lo is considering franchising her Oriental Express restaurant concept. She believes people will pay $6.00 for a large bowl of noodles. Variable costs are $2.10 a bowl. Lo estimates monthly fixed costs for franchisees at $7,800. Read the requirements. ---- Requirement 1. Find a franchisee's breakeven sales in dollars. Begin by identifying the formula to compute the sales in units at various levels of operating income using the contribution margin approach. ) + Breakeven sales in dollars The breakeven sales in dollars is Requirement 2. Is franchising a good idea for Lo if franchisees want a minimum monthly operating income of $6,500 and Lo believes that most locations could generate $23,000 in monthly sales? The target sales in dollars to reach the minimum monthly operating income for franchises is May Woo Lo's franchising concept Videa. She expects most locations the sales required to earn the target profit. TH Re Contribution margin per unit r Lo if franch mc Contribution margin ratio TH um monthly Fixed expenses idea. S Operating income Units sold Variable expenses

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