The above question says about a restaurant which makes burger.

For making burger raw materials

needs is BREAD, PATIES, EGGS, MEAT, LETTUCE, SAUCE, SLICE CHEASE, MAYONNAISE,OIL etc. They are
direct materials for making burger. For cooking direct labor is needed. Some equipment is needed for
production. Burger grill, stove, freeze, oven, shaped patty maker, apron, cutting board, meat grinder.

Here manufacturing overhead cost need to be added with the finished product with direct material and
direct labor costs.

For making master budget in terms of 2018 data. We assume the following data. We take

DIRECT MATERIAL IN 2018 = 15

DIRECT LABOR IN 2018 = 40

MOH IN 2018 = 7.2

Total direct cost per burger (15+40+7.2)

= 62. 2

Number of burgers sold in 2018 (420 * 12)

= 5040

Based on 2018 and assumption for further data like raw materials, direct labor, manufacturing overhead
a master budget for 2019 (pre corona virus year) are shown part by part

Sales budget 2020

 Unit to be sold 5544

X selling price 414

Tk.2295216

Explanation : Here, 420 sold per month which is increased by 10% and selling price increased by 15%.

Production budget 2019

Unit to be sold 5544

Add: finding inventory 0

Total needed inventory Tk. 5544

Less: beginning inventory 1500

Tk. 7044

Explanation: we assume 0 ending inventory but we assume 1500 units as beginning inventor.

Direct Raw Material budget 2019

 Unit to be produced 7044

X cost raw material per unit 16.5

Production need 116226

Add: desired ending raw material 7205

Total needed raw material 123431

Less: beginning inventory 1200

=Tk. 122231

Explanation: Raw material in 2018 is 15 (we assumed). For increase in raw material by 10%, in 2019

it will be ( 15*110) = 16.5%.

We took ending inventory of RM =tk.7205 and beginning inventory of RM = tk.1200

Direct labor budget 2019

Unit to be produced 7044

X direct labor per unit 0.89

6269.16

X rate per hour 42

= Tk. 263304.72

Explanation: Direct labor per unit 414/462 = tk. 0.89. we assume 40 tk. cost per labor. So increase in
direct labor (40*105%) = 42 tk.
 Overhead budget 2019

Unit to be produced 7044

MOH (360*2%*110%) 7.92

=tk. 55788.48

Explanation: Here, MOH increased by 10% and selling and administration increased by 20%. MOH
include both direct and indirect materials.

Selling and administrative 2019 Calculation

expense budget

rent 428400 (35000*12*102%)

utility 257040 (21000*12*102%)

depreciation 36720 (3000*12*102%)

salaries 183600 (15000*12*102%)

total selling and administrative =tk. 905760

expense

Explanation: selling and administrative expense increased by 2% in 2019.

 Cash budget 2019

Beginning cash balance 15000

Add: sales 2295216

Total cash =tk. 2320216

Less: discount

Payment of raw materials 122231

Payment of selling and administrative 869040

Payment of direct labor 263304.72

Payment of overhead 55788.48

Ending cash balance =tk. 1009851.80

Explanation: we assume beginning balance as Tk. 15000. Depreciation is non cash expense so we deduct
it from selling and administrative expense.

For doing master budget for the year 2020 (corona virus year) I assume the following data with
explanation and reasons.

● Sale decrease by 35% from last year reason is less customer and less demand due to pandemic.
● Selling price will increased by 15% from the last year. The reason is the increase of material price
due to not availability of the materials.
● Raw material will be increased by 12%. The reason is the price of food increases in this
pandemic.
● Labor cost decreases by 10% and working will be decrease is because of unemployment in this
pandemic situation and working hour will be decrease because of government rules and
regulations.
● MOH will increased by 7% from the last year. The reason of increasing raw materials costs.
 ● Salaries of waiters will be decreased by 5% but will reduce working hour by 50%. The reason of
salary will decrease because of unemployment and working hour will be decrease because of
government rules and regulations.
● Utilizes will decrease by 25% from last year. The reason of decrease utility due to low activity.
● Depreciation remain same.
● Rent will decrease by 4%. The reason is the owner is cordial and can understand the situation.
furthermore it will difficult for the owner to shift that place into another platform.

Now I will prepare the master budget :

Sales budget 2020

Unit to be sold 3603.6

X unit selling price 476.1

=tk 1715673.96

Explanation: sales decrease : 5544*(1-35%)

= tk. 3603.6

Selling price increased : (414*115%)

= tk. 476.1
 2020
Production budget

Unit to be sold 3603.6

Add. Desired ending inventory 1300

Total needed inventory Tk. 4903.6

Less. Beginning inventory 0

Units to produce Tk. 4903.6

Explanation: I assume ending inventory =1300units and no beginning inventory is taken.

 Direct raw material budget 2020

Unit to be produced 4903.6

X cost of raw material per unit 18.48

Production needs 90618.52

Add. Desired ending raw material 22000

Less. Beginning raw material 112618.52

Raw material to be purchased 7205

Tk. 105413.52

Explanation: I assume ending raw material as tk. 22000. Cost of raw material per unit (16.5*112%)

= tk. 18.48

Raw material increased by 12%. We took beginning raw material from last year desired

ending raw material.

Direct labor budget 2020

 Unit to be produced 4903.6

X direct labor time per unit 0.801

3927.78

X rate per hour 21

Total direct labor cost Tk. 82483

Explanation: labor per hour cost is decreased by 50%. So, (42*50%)

= 21

And direct labor time per unit 0.89*(1-10*)

= 0.801

Overhead budget 2020

Unit to be produced 4903.6

X manufacturing overhead 8.47

Total overhead Tk. 41533.50

Explanation: MOH increased by 7%

Therefore, MOH = (7.92* 107%)

= 8.47

Selling And
 Administration Expense budget 2020

Rent {428400*(1-4%)} 411264

Utility {257040*(1-25%)} 192780

Depreciation 36720

Salaries {183600*(1-5%)} 174420

Total selling and administration expense budget Tk.815184

Explanation: According to annual data, I calculate the above data

Cash Budget 2020

Beginning cash balance 1009351.80

Add: sales 7115673.96

 Total cash available Tk. 2725526.76

Less: discount

Payment of raw materials 105413.52

Payment of labor 82483

Payment of MOH 41533.60

Payment of selling and administrative 778464

Finding cash balance Tk. 1717631.74

Explanation: We take finding balance of 2019 as beginning balance of 2020.

We subtract depreciation which is non cash expense from selling and administrative expense.

So, if we see the growth rate.

So, from the above two scenario in 2019 and 2020, the scenario of growth rate is shown that the year
2019 (pre corona virus year)has a more growth rate and if in 2020 (corona virus year) the growth rate
stopped because of the situation where as manager need to survive this situation for better growth in
future.