Reference no: EM132548772

The entrepreneur is planning to open a pasta restaurant in the newly established shopping center. The plan would be to operate on a franchise basis. The franchise chain charges the entrepreneur a fee based on the amount of turnover to cover marketing and advertising costs and other collaboration costs. However, the entrepreneur is still wondering about the amount of fixed costs.

The following data has been collected for the contribution margin caluclualtions:

• The average raw material cost per serving is € 2.30
• Space costs (rent) 10,000 € / month
• Personnel costs 9,500 € / month
• Administrative costs 300 € / month
• Depreciation of equipment 500 € / month
• Loan repayment 300 € / month and interest 100 € / month
• Franchise fee 5% of tax-free turnover

Question a) Prepare the Contribution margin caluclualtions for the restaurant for one month, assuming that the VAT-inclusive selling price of one serving is € 8.90 (VAT 14%) and 5,000 servings are sold per month.

Question b) What is the critical point of a restaurant on a monthly basis in number of pieces?

Question c) The consultant estimates that the realistic sales volume at this location per month is 3500 servings. The entrepreneur aims for a profit of 5,000 euros per month. What should the taxable selling price be for this to happen with a monthly sale of 3,500 units?