Ralph's Restaurant has the following information for year 2, when several new employees were added to the

Question:

Ralph's Restaurant has the following information for year 2, when several new employees were added to the wait staff:

Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000

Cost of food serveda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000

Employee wages and salariesb . . . . . . . . . . . . . . . . . . . . . . 250,000

Manager salariesc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000

Building costs (rent, utilities, etc.)d . . . . . . . . . . . . . . . . . . . . 150,000

a5 percent of this cost was for food that was not used by the expiration date and 10 percent

was for food that was incorrectly prepared because of errors in orders taken.

b15 percent of this cost was for time spent by cooks to reprepare orders that were incorrectly

prepared because of errors in orders taken.

c20 percent of this cost was time taken to address customer complaints about incorrect orders.

d80 percent of the building was used.

Required

a. Using the traditional income statement format, prepare a value income statement.

b. What value would there be to Ralph from preparing the same information in year 3?

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Fundamentals of Cost Accounting

ISBN: 978-1259565403

5th edition

Authors: William Lanen, Shannon Anderson, Michael Maher

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