second part

Jen and Larry's Frozen Yogurt Company In 2016, Jennifer (en) Liu and Larry Mestas founded Jen and Larry's Frozen Yogurt Company, which was based on the idea of applying the microbrew or micro-batch strategy to the production and sale offrozen yogurt. (The reader may recall that we introduced this yogurt venture in the problems section at the end of Chapter 2.)Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2016 and were estimated to be $1.2 million in 2017. Because Jen and Larry were selling premium frozen yogurt containing premium ingredients, each small cup of yogurt sold for$3, and the cost of producing the frozen yogurt averaged $1.50 per cup. Administrative expenses, including Jen and Larry' salary and expenses for an accountant and two other administrative staff, were estimated at $180,000 in 2017. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in lower downtown (known as LoDo) occurred at the beginning of 2016. Additional equipment needed to make the amount of yogurt forecasted to be sold in 2017 was purchased at the beginning of 2017. As a result, depreciation expenses were expected to be $50,000 in 2017. Interest expenses were estimated at $15,000 in 2017. The average tax rate was expected to be 25 percent of taxable income