Contribution Format Income Statement |
|
Sales Revenue |
530,000 |
Less: Variable costs |
|
Ingredients |
106,000 |
Commission |
82,150 |
Contribution Margin |
341,850 |
Less: Fixed costs |
|
Rent |
60,000 |
Depreciation |
19,380 |
Salaries |
93,000 |
Insurance |
5,800 |
Utilities |
50,000 |
Operating Income |
113,670 |
Simple rate of return = Operating Income/Average Investment |
|
=113,670/214200 |
|
=53.07% |
|
Yes |
|
Payback period = Initial Investment/Annual Inflows |
|
=408000/(113670+19380) |
|
= 3.07 |
years |
No, since payback peirod is higher than 2 years |
The simple rate of return is actually 27.86= 113670/408000
408000 being the initial investment
Problem 7-19 (Algo) Simple Rate of Return; Payback Period (L07-1, L07-6) Paul Swanson has an opportunity to acquire...
Problem 7-19 (Algo) Simple Rate of Return; Payback Period (LO7-1, LO7-6] 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 $5,100 per month. b. Remodeling and necessary equipment would cost $414,000. The equipment would have a 15-year life and a $27,600...
Problem 7-19 (Algo) Simple Rate of Return; Payback Period [LO7-1, LO7-6] 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 $4,300 per month. Remodeling and necessary equipment would cost $366,000. The equipment would have a 20-year life and a $18,300 salvage value....
Problem 7-19 (Algo) Simple Rate of Return; Payback Period [LO7-1, LO7-6] 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 $5,000 per month. b. Remodeling and necessary equipment would cost $408,000. The equipment would have a 20-year life and a $20,400...
Please show work, Thank you! Problem 7-19 (Algo) Simple Rate of Return; Payback Period (LO7-1, LO7-6] 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 $4,300 per month. b. Remodeling and necessary equipment would cost $366,000. The equipment would have a...
Problem 12-19 Simple Rate of Return; Payback Period [LO12-1, LO12-6] 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 $3,500 per month. Remodeling and necessary equipment would cost $270,000. The equipment would have a 15-year life and an $18,000 salvage value. Straight-line...
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 $3,000 per month. b. Remodeling and necessary equipment would cost $288,000. The equipment would have a 15-year life and a $19,200 salvage value. Straight-line depreciation would be used, and the salvage value...
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 $3,500 per month b. Remodeling and necessary equipment would cost $270,000. The equipment would have a 15-year life and an $18,000 salvage value. Straight-line depreciation would be used, and the salvage value...
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 $3,100 per month. b. Remodeling and necessary equipment would cost $294,000. The equipment would have a 20-year life and a $14,700 salvage value. Straight-line depreciation would be used, and the salvage value...
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 $3,500 per month 000. The equipment would have a 15-year life and an $18,000 salvage value. Straight-line depreciation would be used, and the salvage value would be considered in computing depreciation C....
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 $4,300 per month. Remodeling and necessary equipment would cost $366,000. The equipment would have a 20-year life and a $18,300 salvage value. Straight-line depreciation would be used, and the salvage value would be...