For this assignment, you will use the mostly completed Excel sheet provided below to input different numbers and

compute a flexible budget.

Part $4$ Master Budget $($student version$)$ PartA$-$C$.$xIsx.

Budgeting and Variances

Assume Bene Petit is in its third year of operations and is on track to report a small profit during Year $3$ after barely

breaking even in Year $2.$ For this assignment, you will help Taylor budget for Bene Petit's operations in Year $4$ so that she

can plan for operating expenditures and determine how much $($if any$)$ profit she can withdraw from the business or

reinvest to fuel future growth.

Based on the upward trend in Bene Petit's sales over the first three years, industry estimates of growth in the meal$-$

preparation service sector, and Taylor's plans to invest more heavily in online advertising to expand Bene Petit's customer

base. Taylor has estimated Bene Petit's production and sales for each quarter of Year $4$ as follows:

Other operating plans including the following:

Pricing

The retail price for customer meals is $$6$ per serving. However, after promotional discounts and other advertising

promotions are factored in$,$ Taylor estimates that her average sales price will be $$5$ per serving in Year $4.$

Manufacturing Costs $($Customer Meals only$)$

Customer meals are produced "just in time" for delivery to the customer, so there is no Finished Goods Inventory.

Purchases of raw materials $($ingredients$)$ are based on the number of servings in each meal $($single$-$serving $=$ one

serving, dual$-$serving $=$ two servings, family$-$sized $=$ four servings$).$ Each serving should require about one$-$half pound

of raw ingredients at an average standard cost of $$2$ per pound. Bene Petit maintains a small inventory of staple

ingredients equal to $2\%$ of the next quarter's production needs. Assume Bene Petit will have $200$ pounds of raw

material on hand at the beginning and end of Year $4.$

Direct labor wages vary with the number of customer meals, regardless of serving size. Each worker can make and

package about $25$ customer meals per hour and the average labor rate $($including taxes and benefits$)$ is $$20$ per

direct hour.

Variable production overhead costs $($for power, packaging materials, etc.$)$ are applied at a rate equal to $50\%$ of direct

labor.

Annual fixed manufacturing costs of $$37,500$ are spread evenly across the total number of customer meals sold.

Selling and Administrative Costs

The standard cost of donated meals is treated as a variable selling expense. The standard cost of a donated meal is

$$1\mathrm{.}25$ per meal.

Delivery expenses for customer meals should average $$2$ per customer order with an average order size of $4$

customer meals per delivery.

Donated meals are delivered to community partners in batch sizes of $500$ at a standard cost of $$125$ per delivery.

Fixed selling expenses for website hosting and advertising are budgeted at $$7,250$ per quarter.

Fixed administrative expenses are budgeted at $$26,000$ per year.Use the A$.$ Moster Budget tab in the Excel sheet provided to complete the master budget for Bene Petit in a contribution margin

format. Link all cells to the starting assumptions so that you can easily update the budget for changes in the underlying assumptions.

Requlred:

$.$ What is Year $4\text{'}$s budgeted operating income?

Budgeted operating income

b$.$ What is the contribution margin per customer meal sold?

Contribution margin

per customer meal sold

c$.$ What is the break$-$even point $($in customer meals$)$

Break$-$even point

customer meals

d$.$ What is the margin of safety $($in total customer meals$)?$

Margin of safety

customer meals