CATERING BUDGET RATIONALE Sales Revenue The Catering department


Sales RevenueThe 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 SalesThe 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 WagesWages comprise 10% of revenue.
Fixed SalariesThe 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.
MaintenanceScheduled maintenance incurs a fixed annual cost of $400,000. Emergency maintenance is expected to cost 2% of revenue.
Staff TrainingStaff 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 & MarketingSales & marketing expenses comprise $180,000 per quarter in fixed expenses plus 7% of annual sales. 
InsuranceInsurance costs $5200 per month.
UtilitiesUtilities incur a quarterly fixed fee of $12,500, plus 1% of total sales. 
Catering Department 
Budget Projection
Food Sales  
Beverage Sales  
Total Revenue  
Cost of Sales (Food)  
Cost of Sales (Beverage)  
Gross Profit   
Miscellaneous Expenses  
Variable Wages  
Fixed Salaries  
General Administration Expenses  
Staff training  
Sales & Marketing   
Total Other Expenses  
Operating profit or (loss)  

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