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Ralphs Restaurant has the following information for year 2, when several new employees were added to the waitstaff: $100,000

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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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