Options for question 1 oprating expenses are:

Commission

Depreciation

Ingredients

Operating costs

Rent

Sales revenue

Joe Swanson has an opportunity to acquire a franchise from The Yogurt Place Inc. to dispense frozen yogurt products under the name The Yogurt Place. Swanson has assembled the following information relating to the franchise a. A suitable location in a large shopping ma can be rented for $5,440 per month. b. Remodelling and necessary equipment would cost $395,500. The equipment would have a 15-year life and an $14,500 salvage value. Straight-line depreciation would be used. c. On the basis of similar outlets elsewhere, Swanson estimated that sales would total $442,000 per year. Ingredients would cost 20% of sales d. Operating costs would include $123,000 per year for salaries. $3.900 per year for insurance and $32,000 per year for utilities n addition, Swanson would have to pay a commission to The Yogurt Place of 12.5% of sales. Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. JOE SWANSON Income Statement Deduct: Operating expenses: Total operating expenses