Nicole Englezakis manages a South African restaurant in a large southern city. The owner wants to know

Question:

Nicole Englezakis manages a South African restaurant in a large southern city. The owner wants to know how well Nicole did this year at generating sales, controlling expenses, and providing a profit. Complete Nicole’s P&L using vertical analysis.

Nicole’s P&L Last Year % This Year %

SALES:

Food $3,706,381 $3,746,245 Beverage $647,555 1,255,358 Total Sales COST OF SALES:

Food 1,282,656 — 1,611,630 Beverage 145,607 OD PSH)

Total Cost of Sales GROSS PROFIT:

Food 2,423,725 2,134,615 Beverage 501,948 1,093,127 Total Gross. Profit OPERATING EXPENSES:

Salaries and Wages 1,230,910 190,394 Direct Operating Expenses 234,670 1,256,779 196,790 232,571 13,418 111,813 156,538 62,616 Employee Benefits Music and Entertainment 4,427 84,126 Utility Services 141,688 Marketing Repairs and Maintenance 66,416 Administrative and General 128,403 125230 Occupancy 230,400 211,200 98,397 e 149,405 “
945,194 Depreciation Total Operating Expenses Operating Income Interest 166,560 Income Before Income Taxes Income Taxes 147,192 Net Income

a. When comparing this year to last year, was Nicole’s marketing expense in dollars higher or lower?

b. Was Nicole’s marketing expense % higher or lower this year?

c. Do you think that her marketing expense this year positively or negatively contributed to her revenues? Why?

d. When comparing this year to last year, was Nicole’s salaries and wages expense in dollars higher or lower?

e. Was Nicole’s salaries and wages expense % higher or lower this year?
=p. Do you think that her salaries and wages expense this year positively or negatively contributed to her net income? Why?
g. The owner promised Nicole that he would give her a raise if she increased profit margin by at least 2%. Should Nicole receive a raise? Why or why not?

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