Prepare a budget

Based on the information below, prepare an operating budget.

The sales budget is to be based on the anticipated volumes of business activity

indicated by the figures in the table below:

The cost budget is to be based on the following information:

COGS in each month are estimated to be 30% of the total revenue.

The managers reviewed staff rosters and decided to reduce the number of staff

on duty in order to cut down on wages. The new target for the total labour

expense in each month has now been set to 25% of the respective month

revenue, and there will be incentives for managers responsible for rostering to

meet this KPI.

According to the current contract (which is due for renewal in April), the rent is

$9,900 per month.

The forecasted expense associated with advertising activities is $4,000 per

month plus 1% of the given month revenue.

Utility bills:

The electricity invoice for the last quarter was $7,500 and therefore the expense

associated with electricity is estimated to be $2,500 per month.

The gas bill is budgeted to be $800 per month.

The current contract for telephone service bundled with the EFTPOS facility is

$390 per month

The use of chemicals (cleaning detergents and sanitisers) slightly reflects the

volume of business activity and so the expense associated with the chemicals is

expected to be $1500 per month + 1% of the given month revenue.

The anticipated cost of linen (cleaning & hire) is $2000 per month plus 2% of the

particular month revenue.

Interest payable is forecasted at $5,000 per month for the entire period.

The forecasted tax liability is to be based on the current company tax rate as

stipulated by the ATO