Question

In: Accounting

The following information is from Bluff Run Golf Courses. The company runs three courses and the...

The following information is from Bluff Run Golf Courses. The company runs three courses and the July income statement for each course is as follows:

BLUFF RUN GOLF COURSES
Income Statement
Month Ending July 31, 2018
Blue Course   Black Course   Gold Course  
Revenues         
Greens fees revenue    $62,500    $89,000    $42,900   
Outings revenue ? 6,000 29,000
Total revenue $73,100 $95,000 $71,900
  
Expenses         
Landscaping $7,800 $14,200 $6,500
Wages 43,900 ? 32,600
Repairs and maintenance 5,600 2,600 4,500
Fuel 3,100 3,000 1,990
Utilities 1,800 3,000 1,650
Total expenses $62,200 $78,100 $47,240
Operating income $10,900 $16,900 ?

A. Calculate the operating income percentage for each of the courses. Round your percentages to one decimal place.

Course Blue   
Course Black
Course Gold

B.

1. Perform a vertical analysis for each course. Round your percentages to one decimal place.

Bluff Run Golf Courses
Income Statement
Month Ending July 31, 2018
Course Blue Course Black Course Gold
Revenues
Greens fees revenue $62,500 $89,000 $42,900
Outings revenue 6,000 29,000
Total revenue $73,100 $95,000 $71,900
Expenses
Landscaping $7,800 $14,200    $6,500   
Wages 43,900 32,600
Repairs and maintenance 5,600 2,600 4,500
Fuel 3,100 3,000 1,990
Utilities 1,800 3,000 1,650
Total expenses $62200 $78100 $47240
Operating income $10,900 $16,900
Operating income %

2. Based on a vertical analysis of each course, which accounts would you want to investigate further?

C. Which method of analysis (using a dollar value or percentage) is most relevant and/or useful? Why?

Solutions

Expert Solution

Operating Income
blue Black Gold
Tototal Revenue (a) $73,100.00 $95,000.00 71900
Less: Tototal Expense (b) $62,200.00 $78,100.00 47240
Operating Income /(Loss) (c=a-b) $10,900.00 $16,900.00 $24,660.00
% of Operating Income (c/a) 14.9% 17.8% 34.3%
Vertical analysi
blue Black Gold
$ % $ % $ %
Revenue
Green Fees Revenue $62,500.00 85.5% $89,000.00 93.68% $42,900.00 59.67%
Outting Revenue $10,600.00 14.5% $6,000.00 6.32% $29,000.00 40.33%
Tototal Revenue $73,100.00 100.0% $95,000.00 100.00% $71,900.00 100.00%
Expenses
Landscaping $7,800.00 12.5% $14,200.00 18.2% $6,500.00 13.76%
Wages $43,900.00 70.6% $55,300.00 70.8% $32,600.00 69.01%
Repaid & Maintainance $5,600.00 9.0% $2,600.00 3.3% $4,500.00 9.53%
Fuel $3,100.00 5.0% $3,000.00 3.8% $1,990.00 4.21%
Utilities $1,800.00 2.9% $3,000.00 3.8% $1,650.00 3.49%
Tototal Expense $62,200.00 100.0% $78,100.00 100.0% $47,240.00 100.00%
Operating ncome $10,900.00 14.9% $16,900.00 17.8% $24,660.00 34.3%

Gold Should be investigate further .

Percentage method of analysis of most relevant becasue it's easier way to make analyis as per pas trend and with its peers group


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