Freddys Fried Chicken provides the following for the months of April and May:

PROBLEMS

April

May

June

Sales Revenue

Cost of sales $41,500

Wages 34,200

Other expenses 22,000 $97,700 25,100 $118,700 29,100 $143,800 Departmental $22,800 $22,600 $22,100

Income

Guests served 20,200 24,400 29,900

$120,500

$141,300

$165,900

$51,500 42,100

$62,800 51,900

Sales Revenue

Sales revenuefood Sales revenuebeverages Total Sales Revenue

Operating Expenses

Cost of salesfood

Cost of salesbeverage Wages expense

Other operating expenses Total expenses

Operating Income (BT)

April

$199,000 72,000 $271,000

$ 71,500 16,800 76,000 77,100 $241,400 $ 29,600

May

$213,500 74,000 $287,500

$ 82,000 19,900 85,000 82,000 $268,900 $ 18,600

Complete the following:

a. Convert the income statement to common-size vertical analysis.

b. Convert the income statement to a comparative horizontal analysis.

c. With the information given, calculate the average check, cost, and op- erating income per guest. A total of 20,000 guests were served in April

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CHAPTER 3

ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

and 22,000 in May, comment on Freddys operating results for the two months of April and May.

d. Compare the information you received from the common-size vertical analysis and the comparative horizontal analysis.