Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the accounts for the past year. She divided the accounts into four different categories, depending on whether they appeared to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivery costs varied with the number of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appeared to vary with the number of different product types (e.g., pizza, salad, and lasagna). Shirrell came up with the following monthly averages: Food and wage costs $ 183,000 Delivery costs $ 19,250 Other costs $ 180 Fixed costs $ 235,000 Sales revenue $ 640,000 Delivery mileage in miles 7,000 Number of product types 12 Required: 1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. If required, round your answers to two decimal places. Use your rounded answers in subsequent computations if necessary. Average Variable Rate Food and wages _$ ___________ Delivery costs $ _____________ per mile Other costs $ ______________ per product 2. Form an equation for total cost based on the fixed costs and your results from Requirement 1. Enter the sales percent in decimal form, rounded to four decimal places. For example, 62.75% would be entered as 0.6275. Total cost = $___________ + __________ (sales) + $ ________ (miles) + $_________ (product) 3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering? $_________
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Shirrell Blackthorn is the accountant for several pizza restaurants based in a tri-city area. The president of the chain wanted some help with budgeting and cost control, so Shirrell decided to analyze the accounts for the past year. She divided the accounts into four different categories, depending on whether they appeared to be primarily fixed or to vary with one of three different drivers. Food and wage costs appeared to vary with the total sales dollars. Delivery costs varied with the number of miles driven (workers were required to use their own cars and were reimbursed for miles driven). A group of other costs, including purchasing, materials handling, and purchases of kitchen equipment, dishes, and pans, appeared to vary with the number of different product types (e.g., pizza, salad, and lasagna). Shirrell came up with the following monthly averages:
Food and wage costs $ 183,000
Delivery costs $ 19,250
Other costs $ 180
Fixed costs $ 235,000
Sales revenue $ 640,000
Delivery mileage in miles 7,000
Number of product types 12
Required:
1. Calculate the average variable rate for the following costs: food and wages, delivery costs, and other costs. If required, round your answers to two decimal places. Use your rounded answers in subsequent computations if necessary.
Average Variable Rate
Food and wages _$ ___________
Delivery costs $ _____________ per mile
Other costs $ ______________ per product
2. Form an equation for total cost based on the fixed costs and your results from Requirement 1. Enter the sales percent in decimal form, rounded to four decimal places. For example, 62.75% would be entered as 0.6275.
Total cost = $___________ + __________ (sales) + $ ________ (miles) + $_________ (product)
3. The president is considering expanding the restaurant menu and plans to add one new offering to the menu. According to the cost equation, what is the additional monthly cost for the new menu offering?
$_________
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
