Lugano's Pizza Parlor is considering the purchase of a large oven and related equipment for mbxing and baking "crazy bread. The oven and equipment would cost $284,800 delivered and installed. It would be usable for about 15 years, after which it would have a 10% scrap value. The following additional info ation is available a. Mr. Lugano estimates that purchase of the oven and equipment would allow the pizza parlor to bake and sell 70,000 loaves of crazy bread each year. The bread sells for $1.40 per loaf b The cost of the ingredients in a loaf of bread is 30% of the seling price. Mr Lugano estimates that other c. The pizza parlor uses straight-line depreciation on all assets, deducting salvage value from original cost. Required: costs each year associated with the bread would be as follows: salaries, $22,000; utilities, $7,000; and insurance, $4,000 (Ignore income taxes.) 1. Prepare a contribution format income statement showing the net operating income each year from production and sale of the crazy bread. (Input all amounts as positive values.) Sales revenue Less: Cost of ingredients Contribution margin Selling and administrative expenses Depreciation Utilities Sales revenue Salaries Net operating income 2a. Compute the simple rate of return for the new oven and equipment (Round your answer to 1 decimal place.) Simple rate of return 2b. If a simple rate of return above 5% is acceptable to Mr Lugano, will he purchase the oven and equipment? O No Yes 3a. Compute the payback period on the oven and equipment Payback period