Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Textbook Question
Chapter 2, Problem 56E
Value Income Statement
Ralph’s Restaurant has the following information for year 2, when several new employees were added to the waitstaff:
- a. 5 percent of this cost was for food that was not used by the expiration date and 10 percent was for food that was incorrectly prepared because of errors in orders taken.
- b. 15 percent of this cost was for time spent by cooks to reprepare orders that were incorrectly prepared because of errors in orders taken.
- c. 20 percent of this cost was time taken to address customer complaints about incorrect orders.
- d. 80 percent of the building was used.
Required
- a. Using the traditional income statement format, prepare a value income statement.
- b. What value would there be to Ralph from preparing the same information in year 3?
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A quality control activity analysis indicated the following four activity costs of a hotel.
Line Item Description
Amount
Verifying credit card information
$40,000
Customer service training
20,000
Discounting room rates due to poor customer service
16,000
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Total
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Due to rounding there may be difference of 0.1
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$fill in the blank 1
fill in the blank 2%
fill in the blank 3%
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fill in the blank 4
fill in the blank 5%
fill in the blank 6%
Internal failure
fill in the blank 7
fill in the blank 8%
fill in the blank 9%
External failure
fill in the blank 10
fill in the blank 11%
fill in the blank 12%
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fill in the blank 14%
fill in the blank 15%…
For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):
Sales
$34,200
Food and packaging
$11,734
Payroll
9,100
Occupancy (rent, depreciation, etc.)
8,166
General, selling, and admin. expenses
5,200
Other expense
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Total expenses
(34,880)
Operating income (loss)
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Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.
a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place.$fill in the blank 1 million
b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.fill in the blank 2 %
c. How much would operating income increase if same-store sales increased by $2,100 million for the coming year, with no change in the contribution margin ratio or fixed costs?$fill in the blank 3 million
d. What would have been the operating…
Contribution Margin and Contribution Margin Ratio
For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions):
Sales
Food and packaging
Payroll
Occupancy (rent, depreciation, etc.)
General, selling, and admin. expenses
Other expense
Total expenses
Operating income (loss)
$4,310
3,800
4,190
2,200
290
%
$14,500
(14,790)
$(290)
Assume that the variable costs consist of food and packaging, payroll, and 40% of the general,
a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place.
million
b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place.
and
nistrative expenses.
c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution
margin ratio or fixed costs?
Chapter 2 Solutions
Fundamentals Of Cost Accounting (6th Edition)
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