chap The Wheatfield Valley it is managed by Cyrus M management. Last year id Val

Question

chap The Wheatfield Valley it is managed by Cyrus M management. Last year id Valley golf course has been owned by the Miley family for two generations. Currently, ged by Cyrus Miley, a graduate of State University, where he majored in hospitality oment. Last year was a good one for the golf course. Now Cyrus is preparing next year's erating budget. He has gathered a great deal of information to help him prepare the best budget possible. After carefully analyzing that information, Cyrus predicts that next year the course will experience: • A5 percent increase in food sales • A 3 percent increase in beverage sales • No change in food or beverage product cost percentage · Salaries and wages (management and staff) that will increase 4.5 percent · Employee benefits that will increase 10 percent • An increase of 2.5 percent in each Other Expense category · No change in Occupancy Costs and Depreciation & Amortization · Interest payments of $1,000 per month · Tax payments that are estimated to be 25 percent of income before income taxes |Calculate this year's operating percentages for the food and beverage department on the budget worksheet provided, and then using his assumptions about next year, create Cyrus's new operating budget in dollars and percentages. The Wheatfield Valley Golf Course F&B; Department Budget Worksheet for Next Year This Year Actual $ Next Year Budget $ $173,250.00 56,750.00 $58,250.00 9,375.00 $9,000.00 27,250.00 6,200.00 SALES Food Beverage Total Sales COST OF SALES Food Beverages Total Cost of Sales LABOR Management Staff Employee Benefits Total Labor PRIME COST |OTHER CONTROLLABLE EXPENSES Direct Operating Expenses Utilities General & Administrative Expenses Repairs & Maintenance Total Other Controllable Expenses CONTROLLABLE INCOME NON-CONTROLLABLE EXPENSES Occupancy Costs Equipment Leases Depreciation & Amortization Total Non-Controllable Expenses RESTAURANT OPERATING INCOME Interest Expense INCOME BEFORE INCOME TAXES income Taxes NET INCOME $13,200.00 5,975.00 6,375.00 1,750.00 $15,000.00 0.00 4,200.00 $12,000.00 0.00

Explanation / Answer

The Wheatfield Valley Golf Course F&B Department Budget Worksheet for Next Year This Year Actual $ % Next Year Increase Next Year Budget $ % SALES Food $      1,73,250 75% 5% $     1,81,913 76% Beverage $          56,750 25% 3% $        58,453 24% Total Sales $      2,30,000 100% $     2,40,365 100% COST OF SALES Food $          58,250 34% $        61,163 34% Beverage $            9,375 17% $         9,656 17% Total Cost of Sales $          67,625 $        70,819 LABOR Management $           9,000 4.50% $         9,405 Staff $          27,250 4.50% $        28,476 Employee Benefit $            6,200 10% $         6,820 Total Labor $          42,450 18% $        44,701 19% PRIME COST $       1,10,075 48% $     1,15,520 48% OTHER CONTROLLABLE EXPENCES Direct Operating Expences $          13,200 2.50% $        13,530 Utilities $            5,975 2.50% $         6,124 General & Admin Expences $            6,375 2.50% $         6,534 Repairs & Maintainance $            1,750 2.50% $         1,794 Total Other Controllable Expences $          27,300 12% $        27,983 12% CONTROLLABLE INCOME $          92,625 $        96,863 NON-CONTROLLABLE EXPENCES Occupancy Cost $         15,000 $        15,000 Equiptment Lease $                     -   $                  -   Depreciation $           4,200 $        4,200 Total Non- Controllable Expences $         19,200 8% $        19,200 RESTAURENT OPERATING INCOME $          73,425 32% $        77,663 32% Interest Expences $          12,000 $        12,000 INCOME BEFORE INCOME TAX $          61,425 27% $        65,663 27% Income Tax $                 -   $        16,416 25% NET INCOME $         61,425 27% $        49,247 20%

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