P3.4 A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B are as follows:

128

Sales Month Revenue

1 $258,200

2 274,800

3 285,600

4 289,400

5 298,300

6 304,600

For each of the six months:

Cost of Sales, Food

$ 96,200 104,300 110,500 113,100 118,900 123,700

Guests Served

10,200 10,400 10,300 10,100 10,400 10,500

PROBLEMS

Sales revenue

P3.4 A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B are as follows: Restaurant A $154,300 - 60,200 $ 94,100 Restaurant B $206,100 - 78.900 $127.200 Sales revenue Cost of sales Gross margin Direct Expenses Wages expense Supplies expense Other direct costs Contributory Income Indirect Expenses Rent expense Insurance expense Other indirect expenses Operating Income $45,600 12,700 4.500 $70,400 16,800 6,100 62,800 $ 31,300 93,300 $ 33.900 $ 6,500 2,000 3,200 $ 9,000 3,000 3,600 - 11,700 $ 19,600 15,600 $ 18,300 The owners of the restaurants are concerned that restaurant B reports higher sales revenue, yet produces a lower operating income than restaurant A. Convert this information into a common-size vertical income statement for each restaurant, and comment on the results