Income Statement

Bobs Bistro produces party-sized hoagie sandwiches. For next year, Bobs Bistro predicts that 48,900 units will be produced with the following total costs:

Direct materials	?
Direct labor	$59,000
Variable overhead	22,000
Fixed overhead	210,000

Next year, Bobs Bistro expects to purchase $128,500 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	$7,000	$13,100
Ending	$6,900	$15,100

Next year, Bobs Bistro expects to produce 48,900 units and sell 48,200 units at a price of $15.00 each. Beginning inventory of finished goods is $41,500, and ending inventory of finished goods is expected to be $33,000. Total selling expense is projected at $30,000, and total administrative expense is projected at $127,500.

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
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 -%

2. What if the operating expenses percentage for the past few years was 53.93 percent? Management's reaction might be:

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