Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a. With reference to the financial statements prepared for the 4C Company for Year 2007 (see Case 2), prepare a common-size vertical statement. The local

image text in transcribed

a. With reference to the financial statements prepared for the 4C Company for Year 2007 (see Case 2), prepare a common-size vertical statement. The local restaurant association provided Charlie with statistical data that are applica- 34 CHAPTER 3 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS ble for a table service, family-oriented, lunch and dinner restaurant similar to his (see below). The data provide percentage ranges for typical elements of an income statement. Comment on how the operating income (before tax) of the 4C restaurant compares to similar restaurants. Is the comparison valid? Explain. b. The guest count (covers) for the 4C restaurant for the year was 66,612 . Determine the overall average check (sales revenue) for food and beverages. In your opinion, does the average check for food and beverages appear reasonable for a budget-conscious, family-type table service restaurant? c. Calculate the cost percentages for food cost, beverage cost, and the total cost of sales as a percentage of total sales revenue. How does cost of sales for food, beverages, and the total cost of sales compare to the ranges provided for a restaurant of this type? d. Given the choice, would it be better to have a higher or lower percentage of beverage sales revenue compared to food sales revenue? a. With reference to the financial statements prepared for the 4C Company for Year 2007 (see Case 2), prepare a common-size vertical statement. The local restaurant association provided Charlie with statistical data that are applica- 34 CHAPTER 3 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS ble for a table service, family-oriented, lunch and dinner restaurant similar to his (see below). The data provide percentage ranges for typical elements of an income statement. Comment on how the operating income (before tax) of the 4C restaurant compares to similar restaurants. Is the comparison valid? Explain. b. The guest count (covers) for the 4C restaurant for the year was 66,612 . Determine the overall average check (sales revenue) for food and beverages. In your opinion, does the average check for food and beverages appear reasonable for a budget-conscious, family-type table service restaurant? c. Calculate the cost percentages for food cost, beverage cost, and the total cost of sales as a percentage of total sales revenue. How does cost of sales for food, beverages, and the total cost of sales compare to the ranges provided for a restaurant of this type? d. Given the choice, would it be better to have a higher or lower percentage of beverage sales revenue compared to food sales revenue

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Wiley CPA Exam Review Auditing And Attestation 2011

Authors: Patrick R. Delaney, O. Ray Whittington

8th Edition

0470554347, 978-0470554340

More Books

Students also viewed these Accounting questions