Donna Drysdale, co-owner of Drysdale Pizza, provides you with the following information for 2015 and 2016. Conduct a vertical analysis (common-size income statement) for the income statements. This question is divided into three parts: Part 1 2014 2015 2014% 2015% Change in % Revenues: Food 800,000 850,000 Other 50,000 60,000 5.88 6.59 0.71 Total Revenues 100 100 0 Cost of Sales: Food 160,000 170,000 88.89 87.63 -1.26 Other 20,000 24,000 11.11 12.37 1.26 Total cost of Sales 180,000 194,000 21.18 21.32 0.14 Gross Profit: Food 640,000 680,000 Other 30,000 36,000 3.53 3.96 0.43 Total Gross Profit 670,000 716,000 78.82 78.68 -0.14 Operating (Controllable)Expenses: Salaries and Wages 160,000 170,000 18.82 18.68 -0.14 Employee Benefits 50,000 55,000 5.88 6.04 0.16 Other 150,000 170,000 Total Operating Expenses 360,000 395,000 42.35 43.41 1.05 Operating Income Other(Non-Controllable)Expenses: Depreciation 80,000 80,000 9.41 8.79 -0.62 Interest Expense 80,000 75,000 9.41 8.24 -1.17 Occupation Costs 40,000 45,000 Total Non-controllable Expenses 200,000 200,000 23.53 21.98 Income before Income Taxes 12.94 13.30 0.36 Interest Taxes 30,000 35,000 3.53 3.85 0.32 Net Income 80,000 86,000 9.41 9.45 0.04

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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Question

Donna Drysdale, co-owner of Drysdale Pizza, provides you with the following information for 2015 and 2016. Conduct a vertical analysis (common-size income statement) for the income statements.

This question is divided into three parts: Part 1

	2014	2015	2014%	2015%	Change in %
Revenues:
Food	800,000	850,000
Other	50,000	60,000	5.88	6.59	0.71
Total Revenues			100	100	0
Cost of Sales:
Food	160,000	170,000	88.89	87.63	-1.26
Other	20,000	24,000	11.11	12.37	1.26
Total cost of Sales	180,000	194,000	21.18	21.32	0.14
Gross Profit:
Food	640,000	680,000
Other	30,000	36,000	3.53	3.96	0.43
Total Gross Profit	670,000	716,000	78.82	78.68	-0.14
Operating (Controllable)Expenses:
Salaries and Wages	160,000	170,000	18.82	18.68	-0.14
Employee Benefits	50,000	55,000	5.88	6.04	0.16
Other	150,000	170,000
Total Operating Expenses	360,000	395,000	42.35	43.41	1.05
Operating Income
Other(Non-Controllable)Expenses:
Depreciation	80,000	80,000	9.41	8.79	-0.62
Interest Expense	80,000	75,000	9.41	8.24	-1.17
Occupation Costs	40,000	45,000
Total Non-controllable Expenses	200,000	200,000	23.53	21.98
Income before Income Taxes			12.94	13.30	0.36
Interest Taxes	30,000	35,000	3.53	3.85	0.32
Net Income	80,000	86,000	9.41	9.45	0.04