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August September Food Sales $80,000 $82,000 Cost of Food Sales 24,000 25,000 Labor 25,500 28,800 Laundry 4,000 4,200 China, glass, silver 1,000 1,100 Other 16.000 15,500 Total Expenses 70,500 74.600 Net Income $9,500 $7.400 Customers were served as follows: Food 14,000 15,000

August September Food Sales $80,000 $82,000 Cost of Food Sales 24,000 25,000 Labor 25,500 28,800 Laundry 4,000 4,200 China, glass, silver 1,000 1,100 Other 16.000 15,500 Total Expenses 70,500 74.600 Net Income $9,500 $7.400 Customers were served as follows: Food 14,000 15,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The image contains a table representing two income statements for comparison. The table headings and details are as follows: | Item | Year 1 | Year 2 | |------------------------------|---------|---------| | Revenue | $80,000 | $82,000 | | Expenses: | | | | - Food and beverage | $50,000 | $52,000 | | - Labor | $20,000 | $22,000 | | - Rent | $3,000 | $3,100 | | - Utilities | $2,000 | $2,200 | | - China, glass, silver | $1,000 | $1,100 | | - Other | $16,000 | $15,500 | | Total Expenses | $70,500 | $74,600 | | Net Income | $9,500 | $7,400 | Additional Information: - Customers served (Food): 14,000 (Year 1), 15,000 (Year 2). Required: The task is to convert these two income statements into common-size income statements. No graphs or diagrams are presented in the image.
Transcribed Image Text:The image contains a table representing two income statements for comparison. The table headings and details are as follows: | Item | Year 1 | Year 2 | |------------------------------|---------|---------| | Revenue | $80,000 | $82,000 | | Expenses: | | | | - Food and beverage | $50,000 | $52,000 | | - Labor | $20,000 | $22,000 | | - Rent | $3,000 | $3,100 | | - Utilities | $2,000 | $2,200 | | - China, glass, silver | $1,000 | $1,100 | | - Other | $16,000 | $15,500 | | Total Expenses | $70,500 | $74,600 | | Net Income | $9,500 | $7,400 | Additional Information: - Customers served (Food): 14,000 (Year 1), 15,000 (Year 2). Required: The task is to convert these two income statements into common-size income statements. No graphs or diagrams are presented in the image.
**Financial Overview for August and September** This table provides a financial overview comparing two months: August and September. The focus is on food sales and associated costs, providing insight into profitability and customer service volume. | Item | August | September | |-------------------------|---------|-----------| | **Food Sales** | $80,000 | $82,000 | | **Cost of Food Sales** | $24,000 | $25,000 | | **Labor** | $25,500 | $28,800 | | **Laundry** | $4,000 | $4,200 | | **China, Glass, Silver**| $1,000 | $1,100 | | **Other** | $16,000 | $15,500 | | **Total Expenses** | $70,500 | $74,600 | | **Net Income** | $9,500 | $7,400 | **Customer Service Volume**: - August: 14,000 customers served - September: 15,000 customers served **Analysis**: - **Food Sales** increased by $2,000 from August to September. - **Cost of Food Sales** rose by $1,000, indicating a slight increase in raw material or procurement costs. - **Labor Costs** saw a significant increase of $3,300, potentially due to higher wages or increased staffing. - **Net Income** decreased by $2,100 despite the increase in sales, mainly due to the rise in labor and other expenses. - The number of customers served increased by 1,000, reflecting potential growth in business or improved customer acquisition. This analysis aids in understanding cost management and profitability for the given period.
Transcribed Image Text:**Financial Overview for August and September** This table provides a financial overview comparing two months: August and September. The focus is on food sales and associated costs, providing insight into profitability and customer service volume. | Item | August | September | |-------------------------|---------|-----------| | **Food Sales** | $80,000 | $82,000 | | **Cost of Food Sales** | $24,000 | $25,000 | | **Labor** | $25,500 | $28,800 | | **Laundry** | $4,000 | $4,200 | | **China, Glass, Silver**| $1,000 | $1,100 | | **Other** | $16,000 | $15,500 | | **Total Expenses** | $70,500 | $74,600 | | **Net Income** | $9,500 | $7,400 | **Customer Service Volume**: - August: 14,000 customers served - September: 15,000 customers served **Analysis**: - **Food Sales** increased by $2,000 from August to September. - **Cost of Food Sales** rose by $1,000, indicating a slight increase in raw material or procurement costs. - **Labor Costs** saw a significant increase of $3,300, potentially due to higher wages or increased staffing. - **Net Income** decreased by $2,100 despite the increase in sales, mainly due to the rise in labor and other expenses. - The number of customers served increased by 1,000, reflecting potential growth in business or improved customer acquisition. This analysis aids in understanding cost management and profitability for the given period.
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An Income Statement of a company shows the gross profit and the net income of the business. A common-size Income statement is an income statement where each value is represented in percentage values. Each expense and revenue item will be shown as a percentage of the sales value. This kind of statement is useful for performing a vertical analysis of the organization's performance. This kind of statement sheds light on the factors that contribute to the company's profitability and financial performance.

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