Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place. In
ID: 2452444 • Letter: P
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 suitable location in a large shopping mall can be rented for $3,400 per month. Remodeling and necessary equipment would cost $312,000. The equipment would have a 20-year life and an $15,600 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation Based on similar outlets elsewhere. Mr. Swanson estimates that sales would total $370,000 per year Ingredients would cost 20% of sates. Operating costs would include $77,000 per year for salaries. $4,200 per year for insurance, and $34,000 per year for utilities In addition. Mr. Swanson would have to pay a commission to The Yogurt Place. Inc., of 11.0% of sales. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet.Explanation / Answer
Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place. In