Fernando\'s is a tiny sandwich shop just off the State University campus. Custom

Question

Fernando's is a tiny sandwich shop just off the State University campus. Customers enter and place their orders at a small counter area. All orders are take-out because there is no space for dining in.

The owner of Fernando's, Luis Azaria, is attempting to construct a series of budgets. He has accumulated the following information:

Food costs are:

In a normal month when school is in session, Fernando's sells 5,000 sandwiches and 5,000 sodas. In October, State U holds its homecoming celebration. Luis figures that if he adds a noon shift on Saturday and Sunday of homecoming weekend, October sales will be 30% higher than normal. To advertise his noon shifts during homecoming weekend, Luis will buy cups emblazoned with the State U Homecoming schedule. This will add $200 to paper costs for the month. Last year, he added two additional shifts, and his sales goal was realized.

Amount Descriptions

Refer to the list below for the exact wording of an amount description within your budgets.

Total revenue

1. Prepare a flexible budget for a normal school month. (Note: Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

2. Prepare a flexible budget for October. (Note: Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.)

A. The average sandwich (which sells for $4.50) requires 1 roll, 4 ounces of meat, 2 ounces of cheese, 0.05 head of lettuce, 0.25 of a tomato, and a healthy squirt (1 ounce) of secret sauce. B. Each customer typically orders one soft drink (average price $1.50) consisting of a cup and 12 ounces of soda. Refills are free, but this offer is seldom taken advantage of because the typical customer carries out his/her sandwich and soda. C. Use of paper supplies (napkins, bag, sandwich wrap, cups) averages $1,650 per month. D. Fernando's is open for two 4-hour shifts. The noon shift on Monday through Friday requires two workers earning $10 per hour. The evening shift is only worked on Friday, Saturday, and Sunday nights. The two evening shift employees also earn $10 per hour. There are 4.3 weeks in a month. E. Rent is $575 per month. Other monthly cash expenses average $1,800. Score: 56/100 Ferando's Flexible Budget For A Normal School Month 1 Revenue: 4Total revenue 5 Variable food costs: Food 7 Soda 8Monthly costs: 9 Paper 10 Rent 11 Other 12 Direct labor 13 Total costs 575.00 1.800.00

Explanation / Answer

Fernado's Flexible Budget

For A Normal School Month

Revenue

Sale of Sandwitch(5000*4.5)

22500

Sale of Soda(5000*1.5)

7500

Total Revenue

30000

Variable Food Costs

Food

13500

Soda

1200

Monthly Costs

14700

Paper

1650

Rent

575

Other

1800

Direct Labour

2752

6777

Total Costs

21477

Profit

8523

Notes:

Food Cost for 1 Sandwich

4 Ounces of Meat(i.e. .25 lbs)

1.75

2 Ounces of cheese(i.e..125lbs)

0.75

.05 head of lettuce

0.1

.25 of tomato

0.05

1 ounce of secret sauce(.0078125 gallon)

0.05

2.7

Cost of Soda

12 ounces of Soda

0.24

Direct Labour

Noon Shfit( 5 *2*10*4)*4.3

1720

Evening Shift(3*2*10*4)*4.3

1032

2752

Fernado's Flexible Budget

For October

Revenue

Sale of Sandwitch(6500*4.5)

29250

Sale of Soda(6500*1.5)

9750

Total Revenue

39000

Variable Food Costs

Food

17550

Soda

1560

Monthly Costs

19110

Paper

1850

Rent

575

Other

1800

Direct Labour

3440

7665

Total Costs

26775

Profit

12225

Notes:

Expected sales in the month of October

5000*130%

6500

Direct Labour

Noon Shfit( 7 *2*10*4)*4.3

2408

Evening Shift(3*2*10*4)*4.3

1032

3440

Fernado's Flexible Budget

For A Normal School Month

Revenue

Sale of Sandwitch(5000*4.5)

22500

Sale of Soda(5000*1.5)

7500

Total Revenue

30000

Variable Food Costs

Food

13500

Soda

1200

Monthly Costs

14700

Paper

1650

Rent

575

Other

1800

Direct Labour

2752

6777

Total Costs

21477

Profit

8523

Notes:

Food Cost for 1 Sandwich

4 Ounces of Meat(i.e. .25 lbs)

1.75

2 Ounces of cheese(i.e..125lbs)

0.75

.05 head of lettuce

0.1

.25 of tomato

0.05

1 ounce of secret sauce(.0078125 gallon)

0.05

2.7

Cost of Soda

12 ounces of Soda

0.24

Direct Labour

Noon Shfit( 5 *2*10*4)*4.3

1720

Evening Shift(3*2*10*4)*4.3

1032

2752

Fernado's Flexible Budget

For October

Revenue

Sale of Sandwitch(6500*4.5)

29250

Sale of Soda(6500*1.5)

9750

Total Revenue

39000

Variable Food Costs

Food

17550

Soda

1560

Monthly Costs

19110

Paper

1850

Rent

575

Other

1800

Direct Labour

3440

7665

Total Costs

26775

Profit

12225

Notes:

Expected sales in the month of October

5000*130%

6500

Direct Labour

Noon Shfit( 7 *2*10*4)*4.3

2408

Evening Shift(3*2*10*4)*4.3

1032

3440

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