|CATERING BUDGET RATIONALE|
|Sales Revenue||The Catering department offers 4 types of catering packages at following prices per person: (1) Champagne Breakfast $45; (2) Gourmet Picnic $65; (3) Dinner & Drinks $110; (4) All Day Dining $200. The Catering Department operates 365 days per year, and expects the following average numbers of people per day for each of the catering packages: (1) 25 people; (2) 60 people; (3) 110 people; (4) 15 people. Within each of the catering packages, the following amounts will be allocated to food sales (with the remainder allocated as beverage sales): (1) $30; (2) $40; (3) $80; (4) $140|
|Cost of Sales||The gross profit margin should be 61% for food sales, and 76% for beverage sales.|
|Miscellaneous Exp.||Miscellaneous expenses comprise $4000 per week in fixed expenses and 2% of sales.|
|Variable Wages||Wages comprise 10% of revenue.|
|Fixed Salaries||The manager of the Catering department is paid an annual salary of $95,000. The assistant manager is paid $78,000 per year. Supervisors are paid $65,000 per year. There is one manager, one assistant manager, and 5 supervisors. In addition to the payments to salaried staff members, the business must also pay 12% superannuation, and 5% payroll tax.|
|General Admin Exp.||There is a fixed general administration expense of $40,000 per year. Additionally, for every $200 in sales revenue, there is $1 in general administration expenses.|
|Maintenance||Scheduled maintenance incurs a fixed annual cost of $400,000. Emergency maintenance is expected to cost 2% of revenue.|
|Staff Training||Staff training comprises three main elements: (1) leadership training for supervisors & managers; (2) mandatory health & safety conducted annually for every staff member; and (3) induction & buddy training for new staff members. The costs of each type of training are as follows: (1) $4000 per year per supervisor/manager; (2) $90 per year per staff member (including managers/supervisors); (3) $750 per new staff member. At any one time, there are 60 staff members (including the managers/supervisors), and each year 45 new staff members will be hired. See the fixed salaries line for the number of managers/supervisors.|
|Sales & Marketing||Sales & marketing expenses comprise $180,000 per quarter in fixed expenses plus 7% of annual sales.|
|Insurance||Insurance costs $5200 per month.|
|Utilities||Utilities incur a quarterly fixed fee of $12,500, plus 1% of total sales.|
|Catering Department |
|Cost of Sales (Food)|
|Cost of Sales (Beverage)|
|General Administration Expenses|
|Sales & Marketing|
|Total Other Expenses|
|Operating profit or (loss)|
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