Bobs Bistro produces party-sized hoagie sandwiches. For next year, Bobs Bistro predicts that 51,200 units will be produced with the following total costs:

Direct materials	?
Direct labor	$72,000
Variable overhead	18,000
Fixed overhead	230,000

Next year, Bobs Bistro expects to purchase $115,000 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows:

	Direct materials Inventory	Work-in-Process Inventory
Beginning	$4,000	$12,100
Ending	$3,900	$14,100

Next year, Bobs Bistro expects to produce 51,200 units and sell 50,500 units at a price of $13.00 each. Beginning inventory of finished goods is $38,500, and ending inventory of finished goods is expected to be $30,000. Total selling expense is projected at $24,500, and total administrative expense is projected at $128,000.

Required:

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1. Prepare an income statement in good form. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

Bob's Bistro Income Statement For the Coming Year

			Percent
Administrative expensesCost of goods soldGross marginSalesSelling expenses		$- Select -	- Select -%
Administrative expensesCost of goods soldGross marginOperating incomeSelling expenses		- Select -	- Select -%
Administrative expensesCost of goods soldGross marginOperating incomeSelling expenses		$- Select -	- Select -%
Less: Operating expenses
Cost of goods soldGross marginOperating incomeSalesSelling expenses	$- Select -
Administrative expensesCost of goods soldGross marginOperating incomeSales	- Select -	- Select -	- Select -%
Operating incomeOperating loss		$- Select -	- Select -%

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2. What if the operating expenses percentage for the past few years was 65.27 percent? Management's reaction might be:

Further analyze sales reportsGrant bonuses to production personnelTrim administrative staffInvestigate production cost management