1. Company: Kappa Hospitality

Scenario: Cost Control through Budgeting

Data:

• Expected Revenue: $3,000,000
• Variable Costs: 55% of Revenue
• Fixed Costs: $800,000
• Desired Net Income: $500,000

Requirements:

1. Prepare the budgeted income statement.
2. Calculate the budgeted net income.
3. Discuss the role of budgeting in cost control.
4. Suggest ways to manage variable and fixed costs within the budget.
5. Evaluate the impact of a 10% decrease in expected revenue on the budgeted net income.