Paul Swanson has an opportunity to acquire a franchise from The Yogurt Place, Inc., to...
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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 $3,600 per month b. Remodeling and necessary equipment would cost $324,000. The equipment would have a 15-year life and an $21,600 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation. Ingredients would cost 20% of sales per year for utilities. In addition, Mr. Swanson would have to pay a commission to The Yogurt Place, c. Based on similar outlets elsewhere, Mr. Swanson estimates that sales would total $390,000 per year. d. Operating costs would include $79,000 per year for salaries, $4,400 per year for insurance, and $36,000 Inc., of 12.0% of sales Required: 1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet
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