Project 2 - Typical McDonald's Franchise Cost-Volume-Profit Analysis and SWOT Analysis - Worksheet 2 1. Obtain the data from Original Budget you created on Worksheet 1.
2. Complete the four calculations below using the Original Budget data.
3. Complete a Strengths/Weaknesses/Opportunities/Threats (SWOT) Analysis for a typical suburban McDonald's franchise in the United States.

11 1) Calculate the Contribution Margin (CM) % 12 a) Enter your budget figures below 13 Sales dollars 14 Variable Costs 15 Contribution Margin 16 CM% 17 Fixed Costs 18 Net Profit 19 20 2) Calculate the Break-Even Point in S 21 a) Use the formula: BEP $=(Fixed $ / CM%) 22 Break-Even Point 2554780 23 24 3) Calculate the Margin of Safety (MOS) 25 a) Use the formula: Sales - BEP Sales = MOSS 26 Margin of Safety S 233235 27 b) Briefly describe the meaning of Margin of Safety in the space below 28 Margin of Safety is how much output or sales level can fall before 29 a business reaches its break-even point. 30 31 4) Calculate the Break-Even Point in S, assuming a profit target of $250,000 32 a) Use the formula: BEP $ = [(Fixed $ + Profit Target) / CM%)] 33 Break-Even Point 3052788 34 35 SWOT Analysis: Describe 2 examples for each category of a SWOT 36 Anaysis for McDonald's Franchises. 37 38 a) Strenght - What advantages do they have over their competition? 39 1 effieciency- being able to be the fastest makes them more appealing 40 They have the highest brand value in the fast food brands 41 b) Weakness - What disadvantages do they have compared to their competition? 42 1 Being busy all the time makes them prone to not getting everyone through at a decent rate 43 2 Making mistakes- with fast service comes greater odds of not making the meal to order 44 c) Opportunities - What conditions exist today that they can take advantage to improve? 45 1 The population- with a lot of people needing food they can capitalize on those people 46 2 Expansion, they have the resources to expand and ach out to people they never thought possible 47 d) Threats - What conditions exist today that could result in hinder their success? 48 1 Competitors- If a competitor ever beats them out, they could be facing hardships 49 2 change in taste- people are always changing and needing different things, It is up to them to adjust to that market to keep going. 50 51 52 Original Budget CATEGORY AMOUNT $2,700,000 Flexible Budgets Scenario 1 Scenario 2 2,970,000 2,160,000 SALES 10 Franchise Profile: Original Sales and Cost Data 11 CATEGORY AMOUNT 12 SALES $2,700,000 13 COSTS 14 Food Costs $810.000 15 Paper Costs $108,000 16 Crew Payroll $540,000 17 Crew Payroll Taxes $54.000 18 Manager Payroll and Payroll Taxes $108,000 19 Advertising $108,000 20 Promotions $13,500 21 Outside Services - Landscaping $27,000 22 Linens $5,400 23 Operating Supplies $27.000 24 Maintenance and Repairs $40,500 25 Utilities $81.000 26 Training and Travel $16.200 27 Cooking Oil Waste Removal $5,400 28 Rent and Fees $391,500 29 Legal and Accounting $8,100 30 Insurance $54,000 31 Taxes and Licenses $27.000 32 Depreciation $94.500 33 Interest Expense $27,000 34 TOTAL COSTS $2,546,100 35 OPERATING PROFIT $153,900 36 37 38 39 40 41 42 VARIABLE COSTS: Food Costs Paper Costs Linens Operating Supplies Cooking Oil Waste Removal Advertising Promotions Maintenance and Repairs Utilities Training and Travel Legal and Accounting Depreciation Interest Expense Total Variable Costs 810000 $108,000 $5,400 $27,000 $5,400 $108,000 $13,500 $40,500 $81,000 $16,200 $8,100 $94,500 $27,000 $1,344,600 891,000 118,800 5,940 29,700 5.940 118,800 14,850 44.550 89.100 17,820 8,910 103,950 29,700 $1,479,060 712,800 95,040 4,752 23,760 4,752 95,040 11,880 35,640 71,280 14.256 7,128 83,160 23,760 $1,183,248 CONTRIBUTION MARGIN Contribution Margin % $1,355,400 50.2% $1,490,940 50.2% $976,752 45.2% FLXED COSTS Crew Payroll Crew Payroll Taxes Manager Payroll and Payroll Taxes Outside Services-Landscaping Utilities Rent and Fees Insurance Taxes and Licenses $540,000 $54,000 $108,000 $27.000 $81,000 $391,500 $54,000 $27,000 $540,000 $54,000 $108,000 $27,000 $81,000 $391.500 $54,000 $27,000 $540,000 $54,000 $108.000 $27,000 $81,000 $391,500 $54,000 $27,000 43 44 45 46 47 Total Fixed Costs $1,282,500 $1,282,500 $1,282,500 48 49 50 51 OPERATING PROFIT Operating Profit % $72,900 2.7% $208,440 7.0% -$305,748 -14.2% 52 11 1) Calculate the Contribution Margin (CM) % 12 a) Enter your budget figures below 13 Sales dollars 14 Variable Costs 15 Contribution Margin 16 CM% 17 Fixed Costs 18 Net Profit 19 20 2) Calculate the Break-Even Point in S 21 a) Use the formula: BEP $=(Fixed $ / CM%) 22 Break-Even Point 2554780 23 24 3) Calculate the Margin of Safety (MOS) 25 a) Use the formula: Sales - BEP Sales = MOSS 26 Margin of Safety S 233235 27 b) Briefly describe the meaning of Margin of Safety in the space below 28 Margin of Safety is how much output or sales level can fall before 29 a business reaches its break-even point. 30 31 4) Calculate the Break-Even Point in S, assuming a profit target of $250,000 32 a) Use the formula: BEP $ = [(Fixed $ + Profit Target) / CM%)] 33 Break-Even Point 3052788 34 35 SWOT Analysis: Describe 2 examples for each category of a SWOT 36 Anaysis for McDonald's Franchises. 37 38 a) Strenght - What advantages do they have over their competition? 39 1 effieciency- being able to be the fastest makes them more appealing 40 They have the highest brand value in the fast food brands 41 b) Weakness - What disadvantages do they have compared to their competition? 42 1 Being busy all the time makes them prone to not getting everyone through at a decent rate 43 2 Making mistakes- with fast service comes greater odds of not making the meal to order 44 c) Opportunities - What conditions exist today that they can take advantage to improve? 45 1 The population- with a lot of people needing food they can capitalize on those people 46 2 Expansion, they have the resources to expand and ach out to people they never thought possible 47 d) Threats - What conditions exist today that could result in hinder their success? 48 1 Competitors- If a competitor ever beats them out, they could be facing hardships 49 2 change in taste- people are always changing and needing different things, It is up to them to adjust to that market to keep going. 50 51 52 Original Budget CATEGORY AMOUNT $2,700,000 Flexible Budgets Scenario 1 Scenario 2 2,970,000 2,160,000 SALES 10 Franchise Profile: Original Sales and Cost Data 11 CATEGORY AMOUNT 12 SALES $2,700,000 13 COSTS 14 Food Costs $810.000 15 Paper Costs $108,000 16 Crew Payroll $540,000 17 Crew Payroll Taxes $54.000 18 Manager Payroll and Payroll Taxes $108,000 19 Advertising $108,000 20 Promotions $13,500 21 Outside Services - Landscaping $27,000 22 Linens $5,400 23 Operating Supplies $27.000 24 Maintenance and Repairs $40,500 25 Utilities $81.000 26 Training and Travel $16.200 27 Cooking Oil Waste Removal $5,400 28 Rent and Fees $391,500 29 Legal and Accounting $8,100 30 Insurance $54,000 31 Taxes and Licenses $27.000 32 Depreciation $94.500 33 Interest Expense $27,000 34 TOTAL COSTS $2,546,100 35 OPERATING PROFIT $153,900 36 37 38 39 40 41 42 VARIABLE COSTS: Food Costs Paper Costs Linens Operating Supplies Cooking Oil Waste Removal Advertising Promotions Maintenance and Repairs Utilities Training and Travel Legal and Accounting Depreciation Interest Expense Total Variable Costs 810000 $108,000 $5,400 $27,000 $5,400 $108,000 $13,500 $40,500 $81,000 $16,200 $8,100 $94,500 $27,000 $1,344,600 891,000 118,800 5,940 29,700 5.940 118,800 14,850 44.550 89.100 17,820 8,910 103,950 29,700 $1,479,060 712,800 95,040 4,752 23,760 4,752 95,040 11,880 35,640 71,280 14.256 7,128 83,160 23,760 $1,183,248 CONTRIBUTION MARGIN Contribution Margin % $1,355,400 50.2% $1,490,940 50.2% $976,752 45.2% FLXED COSTS Crew Payroll Crew Payroll Taxes Manager Payroll and Payroll Taxes Outside Services-Landscaping Utilities Rent and Fees Insurance Taxes and Licenses $540,000 $54,000 $108,000 $27.000 $81,000 $391,500 $54,000 $27,000 $540,000 $54,000 $108,000 $27,000 $81,000 $391.500 $54,000 $27,000 $540,000 $54,000 $108.000 $27,000 $81,000 $391,500 $54,000 $27,000 43 44 45 46 47 Total Fixed Costs $1,282,500 $1,282,500 $1,282,500 48 49 50 51 OPERATING PROFIT Operating Profit % $72,900 2.7% $208,440 7.0% -$305,748 -14.2% 52