Homework Answers
| Ans. | RALPH'S RESTAURANT | ||||
| Value Income Statement | |||||
| For the Year 2 Ending December 31 | |||||
| Nonvalue - added | Value - added | Total | |||
| Activities | Activities | ||||
| Sales revenue | $0 | $100,000 | $100,000 | ||
| Cost of merchandise: | |||||
| Cost of food served | $5,400 | $30,600 | $36,000 | ||
| Gross margin (loss) | -$5,400 | $69,400 | $64,000 | ||
| Operating expenses: | |||||
| Employee salaries and wages | $2,100 | $11,900 | $14,000 | ||
| Manager salaries | $4,000 | $16,000 | $20,000 | ||
| Building costs | $19,000 | $19,000 | |||
| Operating income (loss) | -$11,500 | $22,500 | $11,000 | ||
| *Working Notes: | |||||
| Non value added activities for Cost of food served : | |||||
| Percent of not used | 5% | ||||
| Percent of incorrectly prepared | 10% | ||||
| Total non value added percentage | 15% | ||||
| Nonvalue - added | Value - added | ||||
| Activities | Activities | ||||
| Cost of food served | $36,000 * 15% = $5,400 | $36,000 - $5,400 = $30,600 | |||
| Employee salaries and wages | $14,000 * 15% = $2,100 | $14,000 - $2,100 = $11,900 | |||
| Manager salaries | $20,000 * 20% = $4,000 | $20,000 - $4,000 = $16,000 | |||
| *100% of building is used it means there is no any percentage of non value added activity. | |||||
| *Gross margin = Sales revenue - Cost of food served | |||||
| *Operating income = Gross margin - Operating expenses | |||||
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