Freddy’s Fried Chicken provides you with the following information from 2 successive months of his operation:

Using the above information, complete the following:

a. Convert the income statement to common-size vertical analysis.

b. Convert the income statement to a comparative horizontal analysis.

c. With this information and the added information that a total of 20,000 guests were served in Month 1 and 22,000 in Month 2, comment on Freddy’s operating results for the 2 months.

d. Compare the information you received from the common-size vertical analysis and the comparative horizontal analysis.

Transcribed Image Text:

Month 1 Month 2 Sales revenue-food $199,000 $213,500 Sales revenue-beverage 72,000 74,000 Total Sales Revenue $271,000 $287,500 Cost of sales-food $ 71,500 $ 82,000 Cost of sales-beverage 16,900 19,900 Labor expense 76,000 85,000 Other expenses Total expenses Operating Income [BT] 77,000 $241,400 $ 29,600 82,000 $268,900 $ 18,600