Chapter 2, Problem 56E

Value Income Statement

Ralph’s Restaurant has the following information for year 2, when several new employees were added to the waitstaff:

1. ^a.         5 percent of this cost was for food that was not used by the expiration date and 10 percent was for food that was incorrectly prepared because of errors in orders taken.
2. ^b.        15 percent of this cost was for time spent by cooks to reprepare orders that were incorrectly prepared because of errors in orders taken.
3. ^c.         20 percent of this cost was time taken to address customer complaints about incorrect orders.
4. ^d.        80 percent of the building was used.

Required

1. a.      Using the traditional income statement format, prepare a value income statement.
2. b.      What value would there be to Ralph from preparing the same information in year 3?