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Paul 5 wanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to dispense
Paul 5 wanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, to dispense frozen yogurt products under The Yogur Place name. Mr. Swanson has assembled the following information relating to the franchise: a. A suitable location in a large shopping mali can be rented for $3,200 per month. b. Remodeling and necessary equipment would cost $300,000. The equipment would have a 20 -year life and a $15,000 salvage value - Straight-fine deprectation woutd be used, snd the salvage value would be considered in computing depreclation. c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $350,000 per year. ingredients would cost 20% of sales. d. Operating costs would include $75,000 per year for salaries, $4,000 per year for insurance, and $32,000 per year for utilities, in addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 15.0% of sales. Required: 1. Prepare a contribution format income statement thot shows the expected net operating income each year from the franchise outlet. 2.d. Compute the simple rate of return promised by the outlet 2-b. If Mr. Swanson requires a simple rate of return of at least 19%, should he acquire the franchise? 3-a. Compute the paybock period on the outet. 3:b. If Mt, 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. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. Paul Swanson has an opportunity to accuire a franchise from The Yogurt Ploce, Incorporated, to dispense frozen yogurt products under The Yogurt Ploce 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 $3,200 per month. b. Remodeling and necessacy equipment would cost $300,000. The equipment would have a-20-year ife and a $15,000 salvage vatue Straight-tine deproctation woutd be used, and the salvage value would be considered in computing depreciation. c. Bosed on similar outlets elsewhere, Mc Swanson estimates that sales would total $350,000 per year. Ingredients would cost 20% of sales d. Operating costs would include $75,000 per year for salaries, $4,000 per year for insurance, and $32,000 per year for utilities. in addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 15,0% of sales. Required: 1. Prepare a contribution format income statement that shows the expected net operating income esch year from the franchise outlet. 2-s. Compute the simple rate of return promised by the outiet. 2-b. If Mr. Swanson requires a simple rate of return of at least 19%, 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. Compute the simple rate of return promised by the outlet. (Round vour answer to 1 decimal place.) Paul Swanson has an opportunity to occuire a franchise from The Yogurt Place, incorporated, to dispense frozen yogurt products under The Vogurt Place name Mr Swanson has assembled the following information relating to the franchise: a. A sultable location in a large shopping mall can be rented for $3,200 per month. b. Remodeling and necessary equipment would cost $300,000. The equipment would have a 20 -year life and a $15,000 salvage vatue Stralght-line deprectation 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 $350.000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $75,000 per year for salarles, $4,000 per year for insurance, and $32,000 per year for utilites. In addition. Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 15.0% of sales. Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outiet. 2.a. Comptite the simple rate of return promised by the outiet 2.b. If M, Swanson requires a simple rate of return of of least 19%, should he acquire the franchise? 3-a Compute the poyback period on the outet. 3.6. If Mr. Swanson wants a paybisck of three years or less, witl he scquire the franchise? Complete this question by entering your answers in the tabs below. Compute the payback period on the outlet. (Round your answer to 1 decimal place.)
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