A potential franchisee of Subway Sandwich Shop Inc. The company is in the process of developing a business plan to present to potential investors. Following are various projected cost data for the operation: The average order sells for $4, with food cost of $2. Required: (1) What is the contribution of each sale toward covering fixed expenses? (2) What is the projected monthly breakeven point in units (round up to nearest whole unit)? (3) The potential franchisee has a target before-tax net profit of $2,000 per month. What level of sales (in units and in dollars) must be achieved (round up to nearest whole unit)? (4) The potential franchisee has a target after-tax net profit of $1,800 per month. What level of sales (in units and in dollars) must be achieved if the tax rate is 35% (round up to nearest whole unit)? (5) What is the operating leverage of this sandwich shop at the target before-tax profit of $2,000? Round your answer to 2 decimal places. (6) What would be the percentage change in net income if sales dollars are increased by 5%? 92. FastQ Company, a specialist in printing, has established 500 convenience copying centers throughout the country. In order to upgrade its services, the company is considering three new models of laser copying machines for use in producing high-quality copies. These highquality copies would be added to the growing list of products offered in the FastQ shops. The selling price to the customer for each laser copy would be the same, no matter which machine is installed in the shop. The three models of laser copying machines under consideration are 1024S, a small-volume model, 1024M, a medium volume model, and 1024G, a large-volume model. The annual rental costs and the variable operating costs vary with the size of the machine. The machine capacities and costs are shown below Required: (1) Determine the volume level in copies where FastQ Company would be indifferent between acquiring either the small-volume model laser copier (1024S) or the medium volume model laser copier (1024M). (2) The management of FastQ Company is able to estimate the number of copies to be sold at each establishment. Present an analysis that would enable FastQ Company to select the most profitable machine without having to make a separate cost calculation for each establishment. (CMA Adapted)
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