her sales reports and records for the months of January through August of the current year.
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.
You have been recently hired as general manager of Lucky’s. It is September 1, and you must prepare the operating budget of this establishment for the first quarter of the upcoming calendar year, and submit it to the corporate office. Since you have been at the operation for only a month or so, you must rely solely on historical data. You gather sales reports and records for the months of January through August of the current year.
Using the data and the budget worksheet provided, prepare the operating budget for Lucky’s for the months of January through March of the upcoming year. Here is the information you determined from the most recent sales and costs records (Please note that the first month has already been completed):
- Sales are 10 percent higher than those of the same month during the previous year.
- Food cost percentage is steady at 32 percent.
- Fixed labor costs are steady at $9,000 per month.
- Variable labor costs are 15 percent of sales.
- Occupancy costs will remain steady at $2,000 per month.
- Other controllable costs are expected to be $10,000 per month.
- Marketing costs have been fixed at $1,000 per month.
- For January, February, and March of last year, Lucky’s sales revenues were as follows:
- January: $60,000
- February: $50,000
- March: $55,000
Attached is the template.
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