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%.