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Check Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to dispense frozen yogurt products under The Yogurt Place name.
Check Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, 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 $3,600 per month b. Remodeling and necessary equipment would cost $324,000. The equipment would have a 15-year life and a $21,600 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 $390,000 per year . Ingredients would cost 20% of sales d. Operating costs would include $79,000 per year for salaries, $4,400 per year for insurance, and $36,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 12.0% 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 24%, should he acquire the franchise? 3-0. Compute the payback period on the outlet 3-6. 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 1 Reg 2 Reg 28 Reg 3A Reg 35 Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Reg 28 Reg 3A Reg 38 Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. OK inces The Yogurt Place, Incorporated, Contribution Format Income Statement Sales Variable expenses Cost of ingredients Commissions 0 0 Contribution margin Forced expenses Salaries Rent Depreciation Insurance Utilities Net operating Income 0 0 References Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 2B Reg Reg 38 Compute the simple rate of return promised by the outlet. (Round your answer to 1 decimal place.) Simple rate of return References Complete this question by entering your answers in the tabs below. Reg 1 Req ZA Reg 28 Req Req 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period years
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