Question:
Analyze Performance for a Restaurant
Doug's Diner is planning to expand operations and is concerned that its reporting system might need improvement. The master budget income statement for the Downtown Doug's, which contains a delicatessen and restaurant operation, follows (in thousands):
|
|
Delicatessen
|
Restaurant
|
Total
|
|
Gross sales
|
$1,000
|
$2,500
|
$3,500
|
|
|
|
|
|
|
Costs
|
|
|
|
|
Purchases
|
600
|
1,000
|
1,600
|
|
Hourly wages
|
50
|
876
|
926
|
|
Franchise fee
|
30
|
76
|
106
|
|
Advertising
|
100
|
200
|
300
|
|
Utilities
|
70
|
126
|
196
|
|
Depreciation
|
50
|
76
|
126
|
|
Lease cost
|
30
|
50
|
80
|
|
Salaries
|
30
|
50
|
80
|
|
Total costs
|
$ 960
|
$2,454
|
$3,414
|
|
Operating profit
|
$ 40
|
$ 46
|
$ 86
|
The company uses the following performance report for management evaluation:
|
DOWNTOWN DOUG'S
|
|
Net Income for the Year
|
|
($000)
|
|
Actual Results
|
|
Actual Results
|
Delicatessen
|
Restaurant
|
Total
|
Budget
|
Over- or (Under-) Budgeta
|
|
Gross sales
|
1200
|
$2,000
|
$3,200
|
$3,500
|
$(300)
|
|
Costs
|
|
|
|
|
|
|
Purchases
|
780
|
800
|
1,580
|
1,600
|
$ (20)
|
|
Hourly wagesb
|
60
|
700
|
760
|
926
|
(166)
|
|
Franchise feeb
|
36
|
60
|
96
|
106
|
(10)
|
|
Advertising
|
100
|
200
|
300
|
300
|
|
|
Utilitiesb
|
76
|
100
|
176
|
196
|
(20)
|
|
Depreciation
|
50
|
76
|
126
|
126
|
|
|
Lease cost
|
30
|
50
|
80
|
80
|
|
|
Salaries
|
30
|
50
|
80
|
80
|
|
|
Total costs
|
1162
|
$2,036
|
$3,198
|
$3,414
|
$(216)
|
|
Operating profit
|
38
|
$ (36)
|
$ 2
|
$ 86
|
$ (84)
|
Required
Prepare a profit variance analysis for the delicatessen segment.