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Accounting Income Statement!!! Are You Smart!!!?

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Accounting Income Statement!!! Are You Smart!!!?

Postby Ualtar » Sun Oct 01, 2017 1:53 pm

My Professor and ALot of Accounting people couldnt solve this problem!!! Are U a genius!!!! I am curious, is it a hard question! I have 2 solutions for This Question, but I have no idea which one is right! Can you help!

Goals/Action plan:

In developing the action plan for next year, the general manager first considered the potential for expansion into the catering business. After meeting with a focus group of interested customers and discussing operations with other local catering businesses a first year sales potential of $20,000 seemed reasonable. The General Manager estimated that food costs could be held to 40% of sales and payroll plus benefit costs to 30% of sales. IN addition, a delivery van would need to be rented for $2,400 per year plus insurance and license of $1,000 annually.

The general manager then met with the other managers to formulate goals for the next year. Consensus was reached on the following goals:

1- Increase regular food sales 7%

2- Increase beverage sales 5%

3- Reduce food costs to 43% of food sales.

4- Reduce beverage costs to 34% of beverages sales.

5- keep payroll costs at 28% of food plus beverage sales.

6- keep benefit costs at 4% of food plus beverages sales

7- keep at the same DOLLAR amount:

- Other income

- Administrative and general

- Rent

- Property taxes

- Property insurance

- Depreciation

8- Increase all remaining costs 5%.

- Questions!!!

1) Develop a schedule to determine whether or not it will be profitable to enter the catering business.

2) Develop a plan or budget for next year using the reporting format number 1 in the bottom of the questions bellow, and the goals stated ABOVE. If u decide to enter the catering business from your analysis in Question 1, add separate lines to format number 1 for the sales and cost of catering.

3) Certain actions will be necessary to achieve each of the goals stated in this budget. For each of the following goals, suggest three actions that may help it :

A- Increase regular food sales

B- Increase beverage sales

C- Reduce food cost percentage

D- Reduce beverage cost percentage

E- Hold payroll cost percentage constant

Format Number 1

Income statement

For the year ended December 31,1993

With comparison industry medians

Middletown Café

December 31

Dorllar /////// Percent ///////// Industry Median percent

////// THESE ARE TO SEPARATE THE DOLLAR ////from the Percent/////From the MEdiant perecent.


Sales

Food ///$1,003,188 // 71.4% //// 80.4%

Beverage /// 402,711 //// 28.6% //// 20.0

Total sales ////1,405,899////100.0 ////100.0

Cost of sales

Food /////440,527 ////// 43.9 ///// 34.0

Beverage /////140,577 /////34.9 ///// 27.7

Total cost of sales/// 581,104 ///// 41.3////// 32.8

GROSS PROFIT //////824,795 ///// 58.7 ///// 67.2

Other income//// 17,186 ///// 1.2 //// 0 .3

Total Income///// 841,981 //// 59.9 ///// 68.6

Controllable Expenses:

Payroll ////392,796 ///// 27.9//// 29.3

Employee Benefits /// 56,488 ///// 4.0/// 5.0

Direct Operating Expenses///// 65,511 /// 4.7 ///// 5.5

Music and Entertainment //// 1,778//// 0.1 //// 0.1

Advertising and Promotion ////// 24, 768 ///// 1.8 ////// 2.0

Utilities /////32,213 //// 2.3 //// 3.0

Administrative and General ///// 76,341///// 5.4 ///// 4.1

Repairs and Maintenance////// 21,228///// 1.5 //// 1.7

ToTAL Controllable expenses ///// 671,123 ////// 47.7//// 53.0

INCOME before OCCUPANCY COSTS///170,858 //// 12.2///// 14.7

Occupancy Costs:

Rent //// 73,107//// 5.2 //// 5.4

Property Taxes /////6,810//// 0.5 //// 0.5

Other Taxes __0__ //// __0__ //// 0.1

Property Insurance ///// 5,375 //// 0.4 //// 0.9

TOTAL OCCUPANCY COST /// 85,292///// 6.1 //// 6.8

Income before Interest and Depreciation ////85,566 //// 6.1/// 7.9

Interest /// ---0---//// --0--- /// 0.4

Depreciation /////56,190//// 4.0 /// 2.3

Income be4 Income Taxes /// $29.376 /// 2.1% // 3.1%
Ualtar
 
Posts: 56
Joined: Thu Feb 20, 2014 7:22 pm

Accounting Income Statement!!! Are You Smart!!!?

Postby Izotz » Thu Oct 05, 2017 7:00 pm

1.
Adding Catering Business - will be profitable

Sales: 20,000

COS: 8,000 (40% of sales)

Payroll: 6,000 (30% of sales)

Rental: 2,400

Ins/Reg: 1,000

Income: 2,600 (13% of sales)

2.
Budget for Next Year - Includes Catering Business

Sales:

Food: 1,073,411 (7% increase over last year)

Beverage: 422,847 (5% increase over last year)

Catering: 20,000 (see above)

Total Sales: 1,516,258

Cost of Sales:

Food: 461,567 (43% of Food Sales)

Beverage: 143,768 (34% of Beverage Sales)

Catering: 8,000 (see above)

Total COS: 613,335

Gross Profit: 902,903

Other Income: 17,186 (same as prior year)

Total Income: 920,109

Controllable Expenses:

Payroll: 424,552 (28% of total sales)

Benefits: 60,650 (4% of total sales)

Direct OpEx: 68,787 (5% increase over prior year)

Entertainment: 1,867 (5% increase over prior year)

Advertising: 26,006 (5% increase over prior year)

Utilities: 33,824 (5% increase over prior year)

Administrative: 76,341 (same as prior year)

Repairs & Maint: 22,289 (5% increase over prior year)

Catering Payroll: 6,000 (see above)

Van Rental: 2,400 (see above)

Ins/Reg-Van: 1,000 (see above)

Total Controll: 723,716

Income b/f Occ:196,393

Occupancy Costs:

Rent: 73,107 (same as prior year)

Property Taxes: 6,810 (same as prior year)

Other Taxes: -0-

Propery Ins: 5,375 (same as prior year)

Interest: -0-

Depreciation: 56,190 (same as prior year)

Total Occup: 141,482

Inc b/f Taxes: 54,911
Izotz
 
Posts: 38
Joined: Sun Feb 02, 2014 11:00 pm


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