ACTIVITY NO.

2
WORKSHOP PROBLEM 2
SKILLS PRACTICE IN BUDGETING AND BUDGET MONITORING

A. Prepare a budget worksheet for a coffee shop for the month of September.

Assume a sales forecast of 2,500,000 with 500,000 beverage sales and

2,000,000 food sales. Use the following budget allocation.

Food/beverage cost (Cost of sales) 35%

Labor cost and employment benefits 20%
Direct operating expenses 5%
Utilities 5%
Rental/amortization 10%
Advertising 1%
Repairs and maintenance 1%
Taxes 1%
Insurance 2%
Depreciation cost 2%
Administrative/General Expense 3%
Profit 15%
100%

BUDGET WORKSHEET

SALES DISTRIBUTION
Ratio of Sales Over Gross
Source Revenue
sales
Food Sales 2,000,000 80%
Beverage Sales 500,000 20%
Total Sales 2,500,000 100%
BUDGET DISTRIBUTION
Food Cost 750,000 37.5%
Beverage Cost 125,000 25%
Breakdown of Budget Allocation
Cost of Sales (combined food 875,000 35%
and beverage)
Labor cost and employment 500,000 20%
benefits
Direct operating expenses 125,000 5%
Utilities 125,000 5%
Rental/amortization 250,000 10%
Advertising 25,000 1%
Repairs and maintenance 25,000 1%
Taxes 25,000 1%
Insurance 50,000 2%
Depreciation cost 50,000 2%
Administrative/General 75,000 3%
Expense
Total Expense 2,125,000 85%
Profit 375,000 15%
TOTAL 2,500,000 100%
ACTIVITY NO. 2
B. Prepare a Variance report worksheet.

SALES VARIANCE REPORT

Source of Sales Forecast Actual Variance %Attainment

Food Sales 2,000,000 1,750,000 -250,000 87.5%

Beverage Sales 500,000 335,000 -165,000 67%
Total Sales 2,500,000 2,085,000 -415,000 83.4%

BUDGET VARIANCE REPORT

BUDGET ACTUAL VARIANCE

Based on actual sales Expenses derived from
sales
Budget Budget in Cost Actual Cost Ratio In Pesos Cost Ratio
Items pesos Ration to Expense
Sales
Food 656,250 37.5% 600,250 34.3% -56,000 -3.2%
Beverage 83,750 25% 104,855 31.3% 21,105 6.3%
Food and 740,000 35.5% 705,105 33.8%
Beverage
Combined

Breakdown of Budget Allocation (Variance)

BUDGET ACTUAL VARIANCE

ITEMS Cost Cost Cost
Amount Amount Amount
Ratio Ratio Ratio
Cost of Sales 1%
(combined food and 729,750 35% 750,600 36% 20,850
beverage)
Labor cost and 417,000 417,000 0 0%
20% 20%
employment benefits
Direct operating 104,250 83,400 -20,850 -1%
5% 4%
expenses
Utilities 104,250 5% 62,550 3% -41,700 -2%
Rental/amortization 208,500 10% 208,500 10% 0 0%
Advertising 20,850 1% 20,850 1% 0 0%
Repairs and 20,850 20,850 0 0%
1% 1%
maintenance
Taxes 20,850 1% 20,850 1% 0 0%
Insurance 41,700 2% 41,700 2% 0 0%
Depreciation cost 41,700 2% 41,700 2% 0 0%
Administrative/General 62,550 41,700 -20,850 -1%
3% 2%
Expense
Total Expense 1,772,250 85% 1,709,700 82% -62,550
Profit 312,750 15% 375,300 18% 62,550 3%
TOTAL 2,085,000 100% 2,085,000 100%