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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.
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. A suitable location in a large shopping mall can be rented for $3,800 per montlh. b. Remodeling and necessary equipment would cost $336,000. The equipment would have a 20-year life and an $16,800 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation. ingredients would cost 20% of sales. per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $410,000 per year d. Operating costs would include $81,000 per year for salaries, $4,600 per year for insurance, and $38,000 Inc., of 13.0% of sales. Required: year from the franchise outlet PAUL SWANSON Contribution Format Income Statement Variable expenses: Selling and administrative expenses
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