A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B:

The owners of the restaurants are concerned that restaurant B reports higher sales revenue, yet produces a lower operating income than restaurant A. Convert the information shown above into a common-size vertical income statement for each restaurant, and comment on the results.

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$45,600 Sales Revenue Cost of sales Gross margin Direct Costs Wages expense Restaurant A $154,300 - 60,200 Restaurant B $206,100 - 78,900 $127,200 $ 94,100 $70,400 Supplies expense 12,700 Other direct costs 4,500 - 62,800 16,800 6,100 - 93,300 Contributory Income $ 31,300 $ 33,900 Indirect Costs Rent expense $ 6,500 $ 9,000 Insurance expense 2,000 3,000 Other indirect expenses 3,200 11,700 3,600 15,600 Operating Income $ 19,600 $ 18,300