| 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. |
| CALCULATION GRID | ||
| Catering Department Budget Projection | 2023 | |
| $ | % | |
| 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 | ||
| Maintenance | ||
| Staff training | ||
| Sales & Marketing | ||
| Insurance | ||
| Utilities | ||
| Total Other Expenses | ||
| Operating profit or (loss) | ||
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