What would the Pro Forma Income Statement for CE look like using Fresh Mexican Pro Forma Income
Question:
What would the Pro Forma Income Statement for CE look like using Fresh Mexican Pro Forma Income Statement as the baseline using the given assumptions in the case?
Assumptions:
The Fresh Mexican financials would be the baseline to create Pro Forma Financials for the new restaurant, CE. The sales were estimated to be approximately $3.7 million in 2018. The assumption that labor costs would be reduced 6%, from 28% to 22%. CE?s overall margin would increase by 2%, from 15% to 17%. All expense accounts should use the percentage of sales calculated from Fresh Mexican except that depreciation and amortization will increase to 5% of sales for CE and rent expense of $20 per square foot times 1,900 square feet. With the growth of Fresh Mexican and a loyal following of customers, the partners believed CE would also succeed since it was in the same vicinity as Fresh Mexican in Jacksonville.
College Accounting A Contemporary Approach
ISBN: 978-0073396958
2nd edition
Authors: David Haddock, John Price, Michael Farina