Part 4 Analytics Assignment A: Prepare the Master Budget

1. Use the A. Master Budget tab in the Excel sheet provided to complete the master budget for Bene Petit in a contribution margin format. Link all cells to the starting assumptions so that you can easily update the budget for changes in the underlying assumptions.

Required:

What is Year 4s budgeted operating income?

What is the contribution margin per customer meal sold?

What is the break-even point (in customer meals)?

What is the margin of safety (in total customer meals)?

Required information [The following information applies to the questions displayed below.] These questions relate to the Integrated Analytics Case: Bene Petit. Select the appropriate eBook link to open the Case Overview, Case Background, and Part 4: Planning and Control. For this assignment, you will use the mostly completed Excel sheet provided below to input different numbers and compute a flexible budget. Budgeting and Variances Assume Bene Petit is in its third year of operations and is on track to report a small profit during Year 3 after barely breaking even in Year 2. For this assignment, you will help Taylor budget for Bene Petit's operations in Year 4 so that she can plan for operating expenditures and determine how much (if any) profit she can withdraw from the business or reinvest to fuel future growth. Based on the upward trend in Bene Petit's sales over the first three years, industry estimates of growth in the mealpreparation service sector, and Taylor's plans to invest more heavily in online advertising to expand Bene Petit's customer base, Taylor has estimated Bene Petit's production and sales for each quarter of Year 4 as follows: Other operating plans including the following: Pricing - The retail price for customer meals is $6 per serving. However, after promotional discounts and other advertising promotions are factored in, Taylor estimates that her average sales price will be $5 per serving in Year 4. Manufacturing Costs (Customer Meals only). - Customer meals are produced "just in time" for delivery to the customer, so there is no Finished Goods Inventory. - Purchases of raw materials (ingredients) are based on the number of servings in each meal (single-serving = one serving, dual-serving = two servings, family-sized = four servings). Each serving should require about one-half pound of raw ingredients at an average standard cost of $2 per pound. Bene Petit maintains a small inventory of staple ingredients equal to 2% of the next quarter's production needs. Assume Bene Petit will have 200 pounds of raw material on hand at the beginning and end of Year 4