1. Prepare a contribution format income statement that shows the expected net operation income each year from the franchise outlet.
2-a Compute simple rate of return promised by outlet
2-b If Swanson requires a simple rate of return of at least 20%, should he acquire the franchise?
3-a Compute payback period of the outlet
3-b If Swanson wants a payback of three years or less, will he acquire the franchise?
1 EOC 27pts Problem 7-19 (Algo) Simple Rate of Return; Payback Period (L07-1, L07-6) Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place name. Mr. Swanson has assembled the following information relating to the franchise a. A suitable location in a large shopping mall can be rented for $4,100 per month b. Remodeling and necessary equipment would cost $354,000. The equipment would have a 20-year life and a $17700 salvage value Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $440,000 per year. Ingredients would cost 20% of sales d. Operating costs would include $84,000 per year for salaries, $4.900 per year for insurance, and $41.000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.5% of sales Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet 2-a. Compute the simple rate of return promised by the outlet 2-b. if Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Reg RAG 2A Reg 20 RA Reg 30 Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet The Yogurt Place, Inc., Contribution Format Income Statement Variable expenses Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Reg 3A Req 3B Prepare a contribution format income statement that shows the expected net operating in outlet The Yogurt Place, Inc., Contribution Format Income Statement nces Variable expenses Fixed expenses Reg 2A > a. A suitable location in a large shopping mall can be rented for $4.100 per month. b. Remodeling and necessary equipment would cost $354,000. The equipment would have a Straight-line depreciation would be used, and the salvage value would be considered in co d. Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total $440,000 sales. d. Operating costs would include $84.000 per year for salaries, $4,900 per year for insurance addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.5% o Required: 1. Prepare a contribution format income statement that shows the expected net operating inco 2-a. Compute the simple rate of return promised by the outlet 2-b. If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franc 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. BOGEL a Reg 1 Req 2A Req 2B Req 3A Reg 3B Compute the simple rate of return promised by the outlet. (Round percentage answer to 1 decima Simple rate of return REF JUUD b. Remodeling and necessary equipment would cost $354.000. The equipment would hav! Straight-line depreciation would be used, and the salvage value would be considered in c. Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total $440.6 sales. d. Operating costs would include $84,000 per year for salaries, $4,900 per year for insura addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.5 Required: 1. Prepare a contribution format income statement that shows the expected net operating in 2-a. Compute the simple rate of return promised by the outlet. 2.b. If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the fra 3-a. Compute the payback period on the outlet 3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise? ces Complete this question by entering your answers in the tabs below. Req i Reg 2A Req 2B Req 3A Reg 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period Tyears a. A suitable location in a large shopping mall can be rented for $4,100 per month b. Remodeling and necessary equipment would cost $354,000. The equipment would have a 20-year Straight-line depreciation would be used, and the salvage value would be considered in computing c. Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total $440,000 per year sales. d. Operating costs would include $84.000 per year for salaries, $4,900 per year for insurance, and $41 addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.5% of sales. Required: 1. Prepare a contribution format income statement that shows the expected net operating income each 2-a. Compute the simple rate of return promised by the outlet. 2-b. If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-b. If Mr. Swanson wants a payback of three years or less, will he acquire the franchise? ... Complete this question by entering your answers in the tabs below. Req 1 Reg 2A Reg 2B Req3A Req 3B If Mr. Swanson wants a payback of three years or less, will he acquire the franchise? Yes No Req 3A
