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

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...

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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