Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Incorporated, 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 $3,700 per month b. Remodeling and necessary equipment would cost $330,000. The equipment would have a 20-year life and a $16.500 salvage value. Straight-line depreciation 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 $400,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include 580,000 per year for salaries. $4,500 per year for insurance, and $37,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 12.5% of sales, es Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet 2-a. Compute the simple rate of return promised by the outlet 2.b. 1 Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchilar 3-a. Compute the payback period on the outlet 3-6. If Me 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. Rea 1 Reg 2 Reg 2 Req R3 Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet The Yogurt Place Incorporated Contribution Format Income Statement Complete this question by entering your newers in the tabs below. 3.33 ins Reg 1 Reg 21 Reqs R30 Prepare a contribution format Income statement that shows the expected net operating income each ynar from the franchise outlet The Yogurt Place, corporated Continent Income that Variable expenses Helen Foed expenses B 2A > 33.33 c Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $100,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $80,000 per year for salaries, $4,500 per year for insurance, and $37,000 per year for utilities, in addition, Mr. Swanson would have to pay a commission to The Yogurt Place, incorporated, 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 2-a. Compute the simple rate of return promised by the outlet 2-b. 1 Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-b. If Me Swanson wants a payback of three years or less, wil he acquire the franchise? References Complete this question by entering your answers in the tabs below. Reg1 Reg 2A Reg 21 Reg SA Reg 30 Compute the simple rate of return promised by the outlet. (Round your answer to 1 decimal place) a. A suitable location in a large shopping mall can be rented for $3.700 per month b. Remodeling and necessary equipment would cost $330,000. The equipment would have a 20 year ife and a $16.500 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation c Based on simitar outlets elsewhere, Mr. Swanson estimates that sales would total $400,000 per year. Ingredients would cost 20% of sales d. Operating costs would include $80.000 per year for salaries, $4,500 per year for insurance, and $37.000 per year for utilities, in addition, Mr. Swanson would have to pay a commission to The Yogurt Place. Incorporated, 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 2-a. Compute the simple rate of return promised by the outlet 2.6. If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? 3-. Compute the payback period on the outlet 3-b. 1 Mr. Swanson wants a payback of three years or less, wil he acquire the franchise? Complete this question by entering your answers in the tabs below. Reg RA RA Reg 30 Mr. Swaron roures simple rate of retum of at least 20%, should he acquire the franchise? Yes NO Wunde autorou Savage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation c Based on similar outlets elsewhere, Me Swanson estimates that sales would total $400,000 per year. Ingredients would cost 20% of sales. d. Operating costs would include $80,000 per year for salaries. $4,500 per year for insurance, and $37,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, 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 2-a. Compute the simple rate of return promised by the outlet 2-6. Mr. Swanson requires a simple rate of return of at least 20%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-b. If Me Swanson wants a payback of three years or less, Will he acquire the franchise? Complete the question by entering your answers in the tabs below. Rea 1 Reg 2A Reg 20 RAJA Reg 35 11 M. Swanson wants payback of three years or less, will he acquire the franchise Yes No
