Answered step by step
Verified Expert Solution
Question
1 Approved Answer
same question Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to dispense frozen yogurt products under The Yogurt Place
same question 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 $4,400 per month b. Remodeling and necessary equipment would cost $372,000. The equipment would have a 10-year life and a $37,200 salvage value Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation c. Based on similar outlets elsewhere. Mc. Swanson estimates that sales would total $470,000 per year. Ingredients would cost 20% of sales d. Operating costs would include $87000 per year for salaries $5,200 per year for Insurance, and $44,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Inc., 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 18%, should he acquire the franchise? 3-a. Compute the payback period on the outlet 3-5. If Mr. Swanson wants a payback of two years or less, will he acquire the franchise? Complete this question by entering your answers in the tabs below. Req 1 Reg 2A Reg 28 Red Reg 3B Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Reg 3A Reg 3B Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet The Yogurt Place, Inc., Contribution Format Income Statement Variable expenses Fored expenses & Reg Req2A >
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started