Numbers 2a and 3a

Cards: Econ 312 Farley Final Qulzlet (no subject) - emmle.hearne@gmail.com-Gmail 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 suitable location in a large shopping mall can be rented for $3,000 per month. Remodeling and necessary equipment would cost $288,000 The equipment would have a 15-year life and an $19,200 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $330,000 per year. Ingredients would cost 20% of sales. Operating costs would include $73,000 per year for salaries, $3,800 per year for insurance, and $30,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., of 14.0% of sales. a. b. c. d. d. Required 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. PAUL SWANSON Contribution Format Income Statement Sales $330,000 Variable expenses: Cost of ingredients Commissions 66,000 46,200 112,200 Contribution margin Selling and administrative expenses: 217,800 Salaries Rent Depreciation Insurance Utilities 73,000 36,000 17,920 3,800 30,000 160,720 57,080 Net operating income