In 20X3, each had sales of $950,000. The Buffalo restaurant is still pricing lower than the...
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In 20X3, each had sales of $950,000. The Buffalo restaurant is still pricing lower than the New York restaurant to establish a customer base. Variable expenses run 65% of sales for the New York restaurant and 70% of sales for the Buffalo restaurant. Each manager is responsible for the rent and some other fixed costs for his or her restaurant. These costs amounted to $105,000 for the New York restaurant and $85,000 for the one in Buffalo. The difference is primarily due to lower rent in Buffalo. In addition, several costs, such as advertising, legal services, accounting, and personnel services, were centralized. The managers had no control of these expenses, but some of them directly benefited the individual restaurants. Of the $335,000 cost in this category, $125,000 related to New York and $160,000 to Buffalo, where most of the additional cost in Buffalo is due to the cost of extra advertising to build up its customer base. The remaining $50,000 was general corporate overhead. Requirements 1. Prepare income statements for each restaurant and for the company as a whole. Use a format that allows easy assessment of each manager's performance and each restaurant's economic performance. 2. Using only the information given in this exercise do the following: a. Evaluate each restaurant as an economic investment. b. Evaluate each manager. In 20X3, each had sales of $950,000. The Buffalo restaurant is still pricing lower than the New York restaurant to establish a customer base. Variable expenses run 65% of sales for the New York restaurant and 70% of sales for the Buffalo restaurant. Each manager is responsible for the rent and some other fixed costs for his or her restaurant. These costs amounted to $105,000 for the New York restaurant and $85,000 for the one in Buffalo. The difference is primarily due to lower rent in Buffalo. In addition, several costs, such as advertising, legal services, accounting, and personnel services, were centralized. The managers had no control of these expenses, but some of them directly benefited the individual restaurants. Of the $335,000 cost in this category, $125,000 related to New York and $160,000 to Buffalo, where most of the additional cost in Buffalo is due to the cost of extra advertising to build up its customer base. The remaining $50,000 was general corporate overhead. Requirements 1. Prepare income statements for each restaurant and for the company as a whole. Use a format that allows easy assessment of each manager's performance and each restaurant's economic performance. 2. Using only the information given in this exercise do the following: a. Evaluate each restaurant as an economic investment. b. Evaluate each manager.
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New York Restaurant Sales 950000 Cost of goods sold 630000 Gross margin 320000 Operating expenses 20... View the full answer
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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