Problem 17: Solution
Part 1
Tim's Tasty Tidbits
Common-Size Income Statements
For the months of August and September, 19X1
Percentages
August September August September
Food Sales $80,000 $82,000 100.00% 100.00%
Cost of Food Sales 24,000 25,000 30.00 30.49
Labor 25,500 28,800 31.88 35.12
Laundry 4,000 4,200 5.00 5.12
China, Glass, Silver 1,000 1,100 1.25 1.34
Other 16,000 15,500 20.00 18.90
Total Expenses 70,500 74,600 88.13 90.98
Net Income $ 9,500 $ 7,400 11.88% 9.03%
Part 2
Average Sales Per Customer:
August September
$5.7143 $5.4667
Average Cost of Sales Per Customer:
August September
$1.7143 $1.6667
Gross Profit Per Customer:
August September
$4.00 $3.80
The analysis above shows that the gross profit per customer has decreased from $4.00 to $3.80. Overall profits have decreased by $2,100 when 1,000 additional customers were serviced in September over August.
Problem 18: Solution
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Pat's Place |
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Comparative Income Statement |
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For the Years of 20X1 and 20X2 |
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Difference |
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20X1 |
20X2 |
$ |
% |
Rooms |
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|
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Revenue |
$976,000 |
$1,041,000 |
$65,000 |
6.66% |
Expenses |
250,000 |
264,000 |
14,000 |
5.60% |
Department Income |
726,000 |
777,000 |
51,000 |
7.02% |
|
|
|
|
|
Food |
|
|
|
|
Revenue |
604,000 |
626,000 |
22,000 |
3.64% |
Expenses |
476,000 |
507,000 |
31,000 |
6.51% |
Department Income |
128,000 |
119,000 |
(9,000) |
-7.03% |
|
|
|
|
|
Telephone |
|
|
|
|
Revenue |
50,000 |
52,000 |
2,000 |
4.00% |
Expenses |
68,000 |
68,000 |
0 |
0.00% |
Department Income |
(18,000) |
(16,000) |
2,000 |
11.11% |
|
|
|
|
|
Total Operated Department Income |
836,000 |
880,000 |
44,000 |
5.26% |
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|
|
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Undistributed Operating Expenses |
|
|
|
|
Administrative and General |
195,000 |
206,000 |
11,000 |
5.64% |
Sales and Marketing |
65,000 |
68,000 |
3,000 |
4.62% |
Property Operations and Maintenance |
69,000 |
68,000 |
(1,000) |
-1.45% |
Utilities |
101,000 |
102,000 |
1,000 |
0.99% |
Total Undistributed Operating Expenses |
430,000 |
444,000 |
14,000 |
3.26% |
|
|
|
|
|
Gross Operating Profit |
406,000 |
436,000 |
30,000 |
7.39% |
Rent |
200,000 |
201,000 |
1,000 |
0.50% |
Depreciation and Amortization |
116,000 |
116,000 |
0 |
0.00% |
Net Operating Income |
90,000 |
119,000 |
29,000 |
32.22% |
Interest Expense |
55,000 |
52,000 |
(3,000) |
-5.45% |
Income before Income Taxes |
35,000 |
67,000 |
32,000 |
91.43% |
Income Taxes |
7,000 |
17,000 |
10,000 |
142.86% |
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|
|
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Net Income |
$28,000 |
$50,000 |
$22,000 |
78.57% |
Problem 19: Solution
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Black Beach Motel |
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Summary Income Statement |
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For the Year Ended December 31, 20X1 |
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Net Revenues |
Cost of Sales |
Payroll & Related Expenses |
Other Expenses |
Income (Loss) |
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Operated Departments |
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|
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Rooms |
$600,000 |
- |
$125,600 |
$40,000 |
$434,400 |
|
Food |
300,000 |
76,100 |
101,000 |
30,000 |
92,900 |
|
Telecommunications |
16,000 |
10,000 |
6,250 |
3,000 |
(3,250) |
|
Rental and Other Income |
6,000 |
|
|
|
6,000 |
|
Total Operated Departments |
$922,000 |
86,100 |
232,850 |
73,000 |
530,050 |
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|
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|
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Undistributed Operating Expenses |
|
|
|
|
|
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Administrative and General |
|
|
50,300 |
20,000 |
70,300 |
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Sales and Marketing |
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|
25,000 |
8,000 |
33,000 |
|
Property Operation and Maintenance |
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|
40,000 |
40,000 |
|
Utilities |
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|
27,000 |
27,000 |
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Total Undistributed Expenses |
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|
75,300 |
95,000 |
170,300 |
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Totals |
$922,000 |
$86,100 |
$308,150 |
$168,000 |
359,750 |
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Gross Operating Profit |
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|
359,750 |
|
Management Fees |
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|
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|
74,880 |
|
Income before Fixed Charges |
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|
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|
284,870 |
|
Rent, Property Taxes and Insurance |
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|
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|
37,000 |
|
Depreciation |
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|
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|
60,000 |
|
Net Operating Income |
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|
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|
187,870 |
|
Interest Expense |
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|
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|
50,000 |
|
Income before Income Taxes |
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|
137,870 |
|
Income Taxes |
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|
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|
41,361 |
|
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|
|
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Net Income |
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$96,509 |
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Problem 20: Solution
|
Bush Beach Motel |
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Summary Income Statement |
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For the Year Ended December 31, 20X1 |
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Net Revenues |
Cost of Sales |
Payroll & Related Expenses |
Other Expenses |
Income (Loss) |
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Operated Departments |
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|
|
|
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|
Rooms |
$549,000 |
- |
$108,000 |
$30,000 |
$411,000 |
|
Food |
250,000 |
65,200 |
72,000 |
20,000 |
92,800 |
|
Rental and Other Income |
1,800 |
|
|
|
1,800 |
|
Total Operated Departments |
$800,800 |
65,200 |
180,000 |
50,000 |
505,600 |
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Undistributed Operating Expenses |
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|
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Administrative and General |
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|
72,000 |
15,000 |
87,000 |
|
Sales and Marketing |
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|
33,470 |
33,470 |
|
Property Operation and Maintenance |
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|
40,000 |
40,000 |
|
Utilities |
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|
27,000 |
27,000 |
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Total Undistributed Expenses |
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|
72,000 |
115,470 |
187,470 |
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Totals |
$800,800 |
$65,200 |
$252,000 |
$165,470 |
318,130 |
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Gross Operating Profit |
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|
318,130 |
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Management Fees |
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|
30,068 |
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Income before Fixed Charges |
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|
288,062 |
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Property Taxes and Insurance |
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|
33,000 |
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Depreciation and Amortization |
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|
45,000 |
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Income before Gain on Sale of Property |
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|
210,062 |
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Gain on Sale of Property |
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|
1,000 |
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Income before Income Taxes |
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|
211,062 |
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Income Taxes |
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|
63,318.60 |
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Net Income |
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$147,743.40 |
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Problem 21: Solution
Salazer Sunset Inn Summary Operating Statement For the year ended December 31, 20X6 |
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Net Revenues |
Cost of Sales |
Payroll and Related Expenses |
Other Expenses |
Income (Loss) |
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Operated Departments |
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Rooms |
$998,000 |
$0 |
$150,000 |
$60,000 |
$788,000 |
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Food & beverage |
740,000 |
240,000 |
200,000 |
55,000 |
245,000 |
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Rentals and other inc |
15,000 |
0 |
0 |
0 |
15,000 |
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Total |
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1,753,000 |
240,000 |
350,000 |
115,000 |
1,048,000 |
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Undistributed Operating Exp. |
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Admin. & general |
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80,000 |
40,000 |
120,000 |
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Sales and marketing |
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0 |
55,000 |
55,000 |
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Prop. Operation & maint. |
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0 |
60,000 |
60,000 |
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Utilities |
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0 |
70,000 |
70,000 |
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Total |
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|
80,000 |
225,000 |
305,000 |
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Totals |
$1,753,000 |
$240,000 |
$430,000 |
$340,000 |
$743,000 |
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Gross Operating Profit |
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|
$743,000 |
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Management fees |
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50,000 |
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Income Before Fixed Charges |
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693,000 |
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Property taxes |
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50,000 |
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Insurance |
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20,000 |
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Net Operating Income |
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623,000 |
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Less replacement reserves |
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50,000 |
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Adjusted Net Operating Income |
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$573,000 |
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Problem 22: Solution
|
Wilkin Inn |
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Comparative Income Statement |
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For the Years of 20X1 and 20X2 |
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Difference |
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|
20X1 |
20X2 |
$ |
% |
Total Revenues |
$1,000,000 |
$1,200,000 |
$200,000 |
20.0 |
Rooms-Revenues |
$600,000 |
$750,000 |
$150,000 |
25.0 |
Payroll & Related Expenses |
90,000 |
100,000 |
10,000 |
11.1 |
Other Expenses |
50,000 |
55,000 |
5,000 |
10.0 |
Department Income |
460,000 |
595,000 |
135,000 |
29.3 |
Food-Revenues |
350,000 |
390,000 |
40,000 |
11.4 |
Cost of Sales |
115,000 |
130,000 |
15,000 |
13.0 |
Payroll & Related Expenses |
75,000 |
82,500 |
7,500 |
10.0 |
Other Expenses |
35,000 |
38,500 |
3,500 |
10.0 |
Department Income |
125,000 |
139,000 |
14,000 |
11.2 |
Telephone-Revenues |
50,000 |
60,000 |
10,000 |
20.0 |
Cost of Sales |
40,000 |
44,800 |
4,800 |
12.0 |
Payroll & Related Expenses |
14,286 |
16,286 |
2,000 |
14.0 |
Other Expenses |
7,000 |
8,000 |
1,000 |
14.3 |
Department Income |
(11,286) |
(9,086) |
2,200 |
19.5 |
Total Operated Department Income |
573,714 |
724,914 |
151,200 |
26.4 |
Undistributed Operating Expenses: |
|
|
|
|
Administrative and General |
100,000 |
111,000 |
11,000 |
11.0 |
Sales and Marketing |
55,000 |
60,000 |
5,000 |
9.1 |
Property Operation and Maintenance |
45,000 |
55,000 |
10,000 |
22.2 |
Utility Costs |
50,000 |
56,000 |
6,000 |
12.0 |
Total Undistributed Operating Expenses |
250,000 |
282,000 |
32,000 |
12.8 |
Gross Operating Profit |
323,714 |
442,914 |
119,200 |
36.8 |
Management Fees |
27,000 |
30,000 |
3,000 |
11.1 |
Income before Fixed Charges |
296,714 |
412,914 |
116,200 |
39.2 |
Rent, Property Taxes and Insurance |
100,000 |
106,000 |
6,000 |
6.0 |
Depreciation |
25,000 |
30,000 |
5,000 |
20.0 |
Net Operating Income |
171,714 |
276,914 |
105,200 |
61.3 |
Interest Expense |
60,000 |
80,000 |
20,000 |
33.3 |
Income before Income Taxes |
111,714 |
196,914 |
85,200 |
76.3 |
Income Taxes |
60,000 |
66,000 |
6,000 |
10.0 |
Net Income |
$51,714 |
$130,914 |
$79,200 |
153.1 |
Problem 23: Solution
Part 1
Rooms Operating Schedule
Net Room Revenue $1,560,000
Expenses
Salaries & Wages 209,000
Employee Benefits 51,000
Total Payroll and Related Exp. 260,000
Other Expenses
Commission 8,600
Contract Cleaning 23,500
Laundry 5,800
Linen 24,800
Miscellaneous 130,000
Reservation 13,500
Total Other Expenses 206,200
Total Expenses 466,200
Departmental Income $1,093,800
Part 2
Cost of Goods Sold
Beginning Inventory $ 38,900
Add: Purchases 328,400
Less: Ending Inventory (53,000)
Cost of Food Consumed 314,300
Less: Employee Meals (12,300)
Cost of Food Sold $ 302,000
Problem 23: Solution (continued)
Part 3
Harby Hotel
Summary Income Statement
For the year ended December 31, 19X2
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Payroll & |
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Net |
Cost of |
Related |
Other |
Income |
|||||||||
|
Revenues |
Sales |
Expenses |
Expenses |
(Loss) |
|||||||||
Operated Departments |
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|
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|
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Rooms |
$1,560,000 |
- |
$260,000 |
$206,200 |
$1,093,800 |
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Food |
858,000 |
302,000 |
93,600 |
93,600 |
368,800 |
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Telephone |
62,400 |
46,800 |
15,600 |
6,240 |
(6,240) |
|||||||||
Rental and Other Income |
119,600 |
9,360 |
20,800 |
9,360 |
80,080 |
|||||||||
Total Operated Departments |
$2,600,000 |
$358,160 |
$390,000 |
$315,400 |
$1,536,440 |
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Undistributed Operating Expenses |
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|
|
|
|
|||||||||
Administrative and General |
|
|
|
337,334 |
337,334 |
|||||||||
Sales and Marketing |
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|
|
111,800 |
111,800 |
|||||||||
Property Operation and Maintenance |
|
|
|
112,200 |
112,200 |
|||||||||
Utilities |
|
|
|
159,500 |
159,500 |
|||||||||
Total Undistributed Expenses |
|
|
|
720,834 |
720,834 |
|||||||||
|
|
|
|
|
|
|||||||||
Totals |
$2,600,000 |
$358,160 |
$390,000 |
$1,036,234 |
815,606 |
|||||||||
Gross Operating Profit |
|
|
|
|
815,606 |
|||||||||
Rent, Property Taxes and Insurance |
|
|
|
|
228,800 |
|||||||||
Depreciation and Amortization |
|
|
|
|
91,000 |
|||||||||
Net Operating Income |
|
|
|
|
495,806 |
|||||||||
Interest Expense |
|
|
|
|
98,800 |
|||||||||
Income before Gain on Sale of Property |
|
|
|
397,006 |
||||||||||
Gain on Sale of Equipment |
|
|
|
|
3,000 |
|||||||||
Income before Income Taxes |
|
|
|
|
400,006 |
|||||||||
Income Taxes |
|
|
|
|
160,002 |
|||||||||
|
|
|
|
|
|
|||||||||
Net Income |
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|
|
|
$240,004 |
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