Budget information for Expresso Cafe

The Expresso Cafe has been operating for the last two (2) years and they are going into their third year of operation. Malcolm the owner of the Expresso Cafe is estimating that the cafe will turn over $500,000 in the next financial year. However, Malcom is uncertain about the cost of the business out goings.

Malcom needs some assistance from you to prepare the budget for the Expresso Cafe for 2019/ 2020 inclusive. Using the following information as a guide prepare a budget draft for all the outgoings for the Expresso Cafe for the next two (2) years.

1. Labour costs increase by 12% in 2019 and will decrease by 7% in 2020
2. Due to a flood Cost of goods (COGS) will rise 18.9% in 2019 and a further 2.1% the following year
3. The cafe has installed power grids on the roof and anticipate that this will decrease electric costs by 23% in 2019 and stay the same for 2020.
4. Malcom has employed a part-time marketing person and anticipates advertising costs to increase
by 8.4% in 2019 and a further 1.78% in 2020
5. The landlord has informed Malcom that there will be two (2) rent increases over the next two (2) years. Rent will increase by 3.6% in 2019 and an additional 6.8% in 2020.

Once you have calculated and drafted a budget that includes the financials for both 2019 and 2020, investigate and calculate the variances both in dollars and percentage. Don’t forget the attach your draft budget.

So far you have reviewed and presented Expresso Cafe budgets. Using the forecast template that you calculated financial information for the years 2019 and 2020. Review your actual budgets figures for both 2019 and 2020 and adjust these budgetary requirements addressing the following:

1. In 2019 the cafe is expected to increase sales by 15 % from previous year. Can you calculate what would be the amount?
2. In 2020 the cafe is projected to increase sales a further 20 %. Can you calculate what would be the amount?
3. What are four (4) reasons that 2018 produced such an unsatisfactory trading result against budget?
4. What might have accounted for 2018 having higher wages in comparison to the budget
5. At the beginning of 2019 the landlord suddenly increases the rent by 10% and in 2020 the rent will further increase by another 10%. To what extent will this impact on the net profit figure?

 

 

 

Sample Solution

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