Question: 5. A. Project each line item for the next year's budget (shown in the chart) using this information. The management team has agreed that sales
5. A. Project each line item for the next year's budget (shown in the chart) using this information.
The management team has agreed that sales will increase 2.5% next year, mostly due to price increases.
Human resources have told you to increase payroll costs by 2.8% and benefits by 1%.
Food costs will increase from 1-2% next year. Use 2% for proteins and produce 1.5% for groceries and 1% for other
items.
Beverage costs will be going up by 1.5%.
Operating expenses should be relatively stable, except paper supplies, cleaning supplies, utilities, and credit card fees are
expected to increase by about 1%.
| Budget Worksheet for FY 2022 | FY 2021 Budget (A) | Projected % Increase (B) | 2022 Budget (C) |
| |||
| Food | $294,000 | ||
| Beverage | 70,000 | ||
| Total Revenue | 364,000 | ||
| |||
| Proteins | 51,200 | ||
| Dairy/eggs | 15,500 | ||
| Groceries | 9,500 | ||
| Fruits and vegetables | 18,800 | ||
| Baled Goods | 5,250 | ||
| Miscellaneous | 4,200 | ||
| Total Food Cost | $104,450 | ||
| Food Cost % | 35.5% | ||
| |||
| Wine | 3,200 | ||
| Draft Beer | 8,000 | ||
| Liquor | 2,500 | ||
| Bar mix, mixers, etc. | 1,000 | ||
| Total Beverage Cost | $14,700 | ||
| Beverage Cost % | 21.0% | ||
| COST OF SALES | $119,150 (32.7%) | ||
| GROSS PROFIT | $244,850 (67.3%) | ||
| |||
| Salaries/wages | 128,000 | ||
| Benefits | 4,000 | ||
| Total Labor Cost | $132,000 | ||
| Labor Cost % | 36.3% | ||
| Operating Expenses | |||
| Paper supplies | 3,700 | ||
| Cleaning supplies | 7,500 | ||
| Misc., direct expenses | 7,000 | ||
| Utilities | 10,800 | ||
| Credit card fees | 6,200 | ||
| Other administrative expenses | 7,200 | ||
| Repairs & maintenance | 8,100 | ||
| Marketing/advertising | 3,400 | ||
| Rent/lease | 30,000 | ||
| Property/real estate tax | 3,400 | ||
| Insurance | 2,800 | ||
| Depreciation | 3,900 | ||
| Total Operating Exp | $93,400 |
A. Using the chart from A, calculate the food cost percentage and labor cost percentage for 2021 and 2022. How do they compare?
B. Once you have projected each line item, allocate the revenue and food costs across all 12 months. Assume that the busiest months are from April to December, with January through March being slower. Explain how you allocated these costs.
| Budget Worksheet for FY 2022 | Jan | Feb | March | April | May | June | July | Aug | Sept | Oct | Nov | Dect |
| 1.Revenue | ||||||||||||
| Food | ||||||||||||
| Beverage | ||||||||||||
| TOTAL REVENUE | ||||||||||||
| 2. Food Cost | ||||||||||||
| Proteins | ||||||||||||
| Dairy/eggs | ||||||||||||
| Groceries | ||||||||||||
| Fruits and vegetables | ||||||||||||
| Baked goods | ||||||||||||
| Miscellaneous | ||||||||||||
| TOTAL FOOD COST |
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