Exhibit 1 Boulevard Sandwiches, Inc. (B) Operating Statement 2018 Actual 2018 Plan Gross Sales Net Sales...

Transcribed Image Text:

Exhibit 1 Boulevard Sandwiches, Inc. (B) Operating Statement 2018 Actual 2018 Plan Gross Sales Net Sales Food $1,936,025 $1,861,860 $1,726,725 $1,761,760 1,025,870 1,024,023 Labor 185,800 199,095 Other Operating Expenses 152,450 148,949 Advertising 78,625 65,165 Miscellaneous 3,320 3,000 Depreciation 24,000 24,000 Insurance 9,780 9,400 Licenses and Fees 10,940 11,700 Rent (Base) 72,000 72,000 Rent (Overage) Management Profit 6,801 98,000 3,093 95,000 $ 59,139 $ 106,335 Supporting Data Average weekly customer count 4,025 3,850 % customers-lunch 50% 40% % customers-dinner 50% 60% Average gross check-lunch $7.50 $7.50 Average net check-lunch $6.50 $7.00 Average gross check-dinner $11.00 $10.50 Average net check-dinner $10.00 $10.00 | Gross Sales: Net Sales: Food: Labor: Other Operating Expenses: Advertising: Miscellaneous: Depreciation: Insurance: Licenses and Fees: Base Rent: Rent Overage: Management: Exhibit 1 (continued) Operating Statement Explanation of Items in Profit Plan Total sales using menu prices. All menu prices remained the same during the year. Gross sales minus discounts that were mainly from coupon use. The coupons were good at any of the four Boulevard Sandwiches locations. The annual food cost in the plan was based on the expected total sales of each menu item and the predetermined markup for that item. For 2018, food costs were expected to be 55% of gross sales. Philips learned that the actual prices of food purchased by Thomas had been about 2% below the level used in the plan. The annual labor cost varied by type of employee. Labor cost for cooks was expected to be fixed, while labor cost for servers and cashiers was expected to vary with the number of customers. Actual versus budgeted staff hours and wages for 2018 are shown in Exhibit 3. These included supplies, maintenance, and utilities. Philips thought they were driven primarily by customer count, and the plan set them at 8% of gross sales. Thomas managed the advertising for the four units. Of the 3.5% of gross sales included in the plan, 0.5% was for use by the sandwich shop manager, 1% was for broadcast media, 1% was for print media, and 1% was for ad preparation. A catchall for small items, mostly fixed, with some responding to customer-count variations. This represented straight-line depreciation on furniture, the POS system, and other equipment. This represented both property and liability insurance. This represented a combination of federal, state, and local business licenses and fees. Some of the amount represented a corporate allocation. A fixed annual rent paid on the restaurant property. A variable amount equal to 5.0% of the excess of actual gross sales above $1,800,000. This consisted of the sandwich shop manager's and assistant manager's combined salary of $55,000, a charge assessed to cover Thomas's salary, and Unit No. 2's portion of the purchasing, accounting, and other service activities that occurred at corporate headquarters. | Exhibit 2 Boulevard Sandwiches, Inc. (B) Philips's Notes for Unit No. 2 Sales Factors: Number of customers Customer lunch/dinner mix Average gross check at lunch and dinner Discount coupon usage Expense Factors: Food prices Food usage Labor rates Labor usage Spending variances Exhibit 3 Boulevard Sandwiches, Inc. (B) Schedule of Staff Hours and Wages 2018 Actual 2018 Plan Kitchen Staff Hours worked 8,000 8,000 Average wages per hour $12.50 $13.00 Cashiers and Servers Hours worked 26,400 32,032 Average wages per hour $3.25 $3.00 Exhibit 1 Boulevard Sandwiches, Inc. (B) Operating Statement 2018 Actual 2018 Plan Gross Sales Net Sales Food $1,936,025 $1,861,860 $1,726,725 $1,761,760 1,025,870 1,024,023 Labor 185,800 199,095 Other Operating Expenses 152,450 148,949 Advertising 78,625 65,165 Miscellaneous 3,320 3,000 Depreciation 24,000 24,000 Insurance 9,780 9,400 Licenses and Fees 10,940 11,700 Rent (Base) 72,000 72,000 Rent (Overage) Management Profit 6,801 98,000 3,093 95,000 $ 59,139 $ 106,335 Supporting Data Average weekly customer count 4,025 3,850 % customers-lunch 50% 40% % customers-dinner 50% 60% Average gross check-lunch $7.50 $7.50 Average net check-lunch $6.50 $7.00 Average gross check-dinner $11.00 $10.50 Average net check-dinner $10.00 $10.00 | Gross Sales: Net Sales: Food: Labor: Other Operating Expenses: Advertising: Miscellaneous: Depreciation: Insurance: Licenses and Fees: Base Rent: Rent Overage: Management: Exhibit 1 (continued) Operating Statement Explanation of Items in Profit Plan Total sales using menu prices. All menu prices remained the same during the year. Gross sales minus discounts that were mainly from coupon use. The coupons were good at any of the four Boulevard Sandwiches locations. The annual food cost in the plan was based on the expected total sales of each menu item and the predetermined markup for that item. For 2018, food costs were expected to be 55% of gross sales. Philips learned that the actual prices of food purchased by Thomas had been about 2% below the level used in the plan. The annual labor cost varied by type of employee. Labor cost for cooks was expected to be fixed, while labor cost for servers and cashiers was expected to vary with the number of customers. Actual versus budgeted staff hours and wages for 2018 are shown in Exhibit 3. These included supplies, maintenance, and utilities. Philips thought they were driven primarily by customer count, and the plan set them at 8% of gross sales. Thomas managed the advertising for the four units. Of the 3.5% of gross sales included in the plan, 0.5% was for use by the sandwich shop manager, 1% was for broadcast media, 1% was for print media, and 1% was for ad preparation. A catchall for small items, mostly fixed, with some responding to customer-count variations. This represented straight-line depreciation on furniture, the POS system, and other equipment. This represented both property and liability insurance. This represented a combination of federal, state, and local business licenses and fees. Some of the amount represented a corporate allocation. A fixed annual rent paid on the restaurant property. A variable amount equal to 5.0% of the excess of actual gross sales above $1,800,000. This consisted of the sandwich shop manager's and assistant manager's combined salary of $55,000, a charge assessed to cover Thomas's salary, and Unit No. 2's portion of the purchasing, accounting, and other service activities that occurred at corporate headquarters. | Exhibit 2 Boulevard Sandwiches, Inc. (B) Philips's Notes for Unit No. 2 Sales Factors: Number of customers Customer lunch/dinner mix Average gross check at lunch and dinner Discount coupon usage Expense Factors: Food prices Food usage Labor rates Labor usage Spending variances Exhibit 3 Boulevard Sandwiches, Inc. (B) Schedule of Staff Hours and Wages 2018 Actual 2018 Plan Kitchen Staff Hours worked 8,000 8,000 Average wages per hour $12.50 $13.00 Cashiers and Servers Hours worked 26,400 32,032 Average wages per hour $3.25 $3.00