1. Identify each cost from the Franchise Profile as a variable or fixed cost and place in appropriate row on the Original Budget.

2. Complete the calculations on the Original Budget. Note: The Operating Budget should equal $153,900.

3. Prepare a Flexible Budget for Scenario 1. Assume Sales and Variable Costs increase by 10%.

4. Prepare a Flexible Budget for Scenario 1. Assume Sales and Variable Cost decrease by 20%.

Original Budget CATEGORY Flexible Budgets Scenario 1 Scenario 2 SALES AMOUNT $2,700,000 VARIABLE COSTS: Franchise Profile: Original Sales and Cost Data CATEGORY AMOUNT SALES $2,700,000 COSTS Food Costs $810,000 Paper Costs $108,000 Crew Payroll $540,000 Crew Payroll Taxes $54,000 Manager Payroll and Payroll Taxes $108,000 Advertising $108,000 Promotions $13,500 Outside Services - Landscaping $27,000 Linens $5,400 Operating Supplies $27,000 Maintenance and Repairs $40,500 Utilities $81,000 Training and Travel $16,200 Cooking Oil Waste Removal $5,400 Rent and Fees $391,500 Legal and Accounting $8,100 Insurance $54,000 Taxes and Licenses $27,000 Depreciation $94,500 Interest Expense $27,000 TOTAL COSTS $2,546,100 OPERATING PROFIT $153,900 Total Variable Costs SO SO SO CONTRIBUTION MARGIN Contribution Margin % $2,700,000 100.0% SO #DIV/0! SO #DIV/0! FIXED COSTS Total Fixed Costs SO SO SO SO OPERATING PROFIT Operating Profit % $2,700,000 100.0% SO #DIV/0! #DIV/0