Assignment 2

HA355 : The Class : Financial Statement : Budgetary Control : Assignment 2

Budget Problem

You are asked to develop annual budget for a new restaurant. Monthly food sales are forecasted at the following levels:

January	$ 50,000	July	$ 85,000
February	$55,000	August	$ 87,000
March	$ 60,000	September	$ 60,000
April	$ 66,000	October	$ 54,000
May	$ 72,000	November	$ 50,000
June	$ 80,000	December	$ 50,000

Beverage sales are expected to be 21% of food sales. Cost of sales is estimated at 31% for food and 21% for beverages. The basic labor staff for January is $20,000. For every additional $10,000 step incraese in total sales, two additional employees will be required costing $2,000 a month.

Direct costs are estimated at 7%of total sales. Marketing will kick off a promotion at $10,000 per month for the first three months; thereafter it will be $1,000 per month. Repairs and maintenance will vary with total sales at a rate of 2%.

In addition the restaurant will incur the following fixed monthly expenses:

Adminstration	$ 4,000
Occupation expenses	7,000
Interest expenses	2,000
Depreciation	4,000

Prepare a monthly budget for a full year including the total twelve-month numbers. Download the spreadsheet file to answer this problem. Complete the control factor sheet and then complete the income statement by referring back to the control factor sheet. Save a file copy of your answer, as we will refer back to this problem in topic three, Cost-Volume-Profit Analysis.

Once you have finished you should:

Go on to Topic 3: Cost-Volume-Profit Analysis
or
Go back to Budgetary Control

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or call (520) 523-1001