Answer

Exercise 2: Statements of income and return on revenue Nick Strizzi owns and operates a pizza delivery and take-out restaurant. In 2013, he sold 100,000 pizzas at an average selling price of $15.00. The cost to make each pizza is $3.00 for cheese, $2.50 for spices, and $3.75 for the crust and other ingredients. The annual cost of operating the business is as follows: Rent Salaries Insurance Advertising Car expenses The income tax rate for 2013 was 18%. Nick is preparing a projected income statement for 2014. The planning assumptions are as follows: Increase in number of pizzas sold Selling price per pizza Increase in cost of cheese Increase in cost of spices Increase in cost of crust and other ingredients Annual rent Increase in salaries Increase in insurance costs $ 55,000 $230,000 $ 15,000 $ 30,000 $150,000 Advertising costs Increase in car expenses Income tax rate 10% $ 16.00 8% 5% 9% $65,000 12% 10% $35,000 15% 17% Questions 1. Prepare Nick Strizzi's statement of income for 2013 and 2014. Upload your work as a PDF, image, or Excel file. 2. Calculate Nick Strizzi's return on revenue ratios for 2013 and 2014