Question
Bob's Bistro produces party-sized hoagle sandwiches. For next year, Bob's Bistro predicts that 53,400 units will be produced with the following total costs: Direct
Bob's Bistro produces party-sized hoagle sandwiches. For next year, Bob's Bistro predicts that 53,400 units will be produced with the following total costs: Direct materials Direct labor Variable overhead Fixed overhead $73,000 23,000 250,000 Next year, Bob's Bistro expects to purchase $118,500 of direct materials. Projected beginning and ending inventories for direct materials and work in process are as follows: Direct materials Work-in-Process Beginning Ending Inventory $6,000 $5,900 Inventory $10,100 $12,100 Next year, Bob's Bistro expects to produce 53,400 units and sell 52,700 units at a price of $14.00 each. Beginning inventory of finished goods is $44,500, and ending inventory of finished goods is expected to be $36,000. Total selling expense is projected at $24,500, and total administrative expense is projected at $125,000. Required: 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 % Less: Operating expenses 2. What if the operating expenses percentage for the past few years was 59.85 percent? Management's reaction might be:
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