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Saved 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 $5,200 per month. b. Remodeling and necessary equipment would cost $420,000. The equipment would have a 20-year life and a $21,000 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 $550,000 per year. Ingredients would cost 20% of sales, d. Operating costs would include $95,000 per year for salaries, $6,000 per year for insurance, and $52,000 per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incorporated, of 16.5% 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. If 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 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. Req1 Reg 2A Reg 20 Reg ЗА Reg 38 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 Variable expenses
Paul Swanson has an opportunity to acquire a franchise from The Yogurt P under The Yogurt Place name. Mr. Swanson has assembled the following i a. A suitable location in a large shopping mall can be rented for $5,200 pe b. Remodeling and necessary equipment would cost $420,000. The equip value. Straight-line depreciation would be used, and the salvage value u C. Based on similar outlets elsewhere, Mr. Swanson estimates that sales wc sales. d. Operating costs would include $95,000 per year for salaries, $6,000 per addition, Mr. Swanson would have to pay a commission to The Yogurt Pla Required: 1. Prepare a contribution format income statement that shows the expected 2-a. Compute the simple rate of return promised by the outlet 2-b. If Mr. Swanson requires a simple rate of return of at least 20%, should he 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of two years or less, will he acquire the fi Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req ЗА Req 3B Compute the simple rate of return promised by the outlet. (Round your answert Simple rate of return % < Req1 Req 2B>
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, under The Yogurt Place name. Mr. Swanson has assembled the following informa a. A suitable location in a large shopping mall can be rented for $5,200 per mont b. Remodeling and necessary equipment would cost $420,000. The equipment value. Straight-line depreciation would be used, and the salvage value would b c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would tot sales. d. Operating costs would include $95,000 per year for salaries, $6,000 per year fc addition, Mr. Swanson would have to pay a commission to The Yogurt Place, Incc Required: 1. Prepare a contribution format income statement that shows the expected net oper 2-a. Compute the simple rate of return promised by the outlet 2-b. If Mr. Swanson requires a simple rate of return of at least 20%, should he acquire 3-a. Compute the payback period on the outlet. 3-b. 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. Reg 1 Req 2A Req 28 Reg 3A Req 3B Compute the payback period on the outlet. (Round your answer to 1 decimal place.) Payback period years Req 2B Req 3B >