Budget Preparation for Restaurant Beachside Case Study

This case study analyzes budget preparation for two different entities: Restaurant Beachside and Ocean Fresh Ltd. The first part focuses on the Restaurant Beachside, demonstrating the creation of a three-month budget (December to February) for a specific dessert item. The budget includes volume, cost per unit, sales calculations with a 50% markup, and detailed expense breakdowns for shop expenses, wages, rent, other costs, and living expenses, along with a new computer and shop fittings. The analysis includes surplus/deficit calculations and bank balance considerations. The second part of the case study examines Ocean Fresh Ltd, presenting a sales budget prepared on a quarterly basis. The sales budget incorporates estimates from the Tuna industry council and the Department of Fisheries, calculating average production estimates for each quarter. The conclusion emphasizes the importance of budgeting for anticipating income and expenditures to achieve desired profits and control costs.

Case Study

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
CASE STUDY 1 .............................................................................................................................1
Preparation of budget for the Chef for December to January................................................1
CASE STUDY 2..............................................................................................................................3
Preparation of sales budget for Ocean Fresh Ltd...................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Budget is required to be prepared by company as it provides several benefits. Present
report deals with budget preparation of Restaurant Beachside for three months. On the other
hand, another organisation is Ocean Fresh Ltd for which sales budget is prepared. Hence, it is
quite beneficial for company to formulate budget for initiating control upon expenses and
gaining income. Hence, budget provides clarity about expenditures to be incurred and income to
be earned.
CASE STUDY 1
Preparation of budget for the Chef for December to January
Business Budget for Restaurant Beachside
Business Budget
for three months
for Restaurant
Beachside
Particulars December January February
Totals for the
quarter
Volume 5000 5000 5000 15000
Cost per unit 8 8 8 24
Adding mark up
of 50 % (8 * 0.5) 12 12 12 36
Total selling units
for month 5000 6500 8450 19950
Total sales 60000 78000 101400 239400
0
Total purchases 40000 52000 67600 159600
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at cost
Shop expenses 4000 4000 4000 12000
Wages 5500 5500 5500 16500
Rent 2000 2000 2000 6000
Other costs 4000 4000 4000 12000
Living expenses 2500 2500 2500 7500
Computer and
shop fittings 10000 10000
Total expenses 58000 80000 85600 223600
Surplus / Deficit
for month 2000 -2000 15800 15800
Opening balance
of bank 1000 1000 -3000 8000
Closing balance
for month 1000 -3000 18800 16800
The budget is termed as a financial goal which is estimated to be achieved by
organisation in the future course of action quite effectually. Preparation of budget is essentially
required so that business may be able to estimate expenses that will be incurred and income to be
earned in effectual manner. It is needed by the company as without anticipation of total
expenses, income cannot be estimated. This is needed so that organisation can easily able to
carry out expenditures in the best possible way. In relation to this, if expenses incurred are more
than income garnered, it will initiate losses for the company. Thus, preparation of budget
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resolves problems in effective way as budget is formulated in anticipation of profits and
expenses (Maher, Fakhar and Karimi, 2018).
It can be interpreted from above budget prepared for three months such as December,
January and February. The organisation named as Restaurant Beachside is planning to purchase
particular type of dessert that it sells in the site in effective way. Furthermore, each dessert will
cost around 8 inclusive of GST and volume of sales will be 5000 in further months. The sales
will increase by 30 % in next two months ie January and February. The total sales are arrived at
mark up of 50 %. Hence, sales are estimated to be 60000, 78000 and 101400 for three months.
On the other hand, purchases are assumed to be same of units sold in each of the month in
effective manner. It can be interpreted that firm will be able to sell products in the best possible
way. It will be maximized up to a high extent.
Furthermore, expenditures are also taken with reference to the budget. The wages are
5500, rent expenses are 2000, shop expenses are 4000, other costs are 4000. Apart from this,
living expenditures are 2500 and new computer and shop fittings cost amounts to 10000 in the
month of January. Hence, total expenses are 58000, 80000 and 85600 for the three months and
total amounts to 223600. In relation to this, sales are being deducted from expenses and surplus
or deficit is taken out with much ease. In addressing this, bank balance of 1000 of Chef is taken.
Thus, budget is effectively formulated for months for the restaurant. Thus, budget is immensely
helpful for business so that it may easily accounts for estimation of income and expenditures
which would be incurred in coming period in effectual manner (Xu, Zhang and Pinedo, 2017). It
helps to keep track of costs so that it may not exceed profits of company.
CASE STUDY 2
Preparation of sales budget for Ocean Fresh Ltd
Sales Budget
Sales budget
for Ocean
Fresh Ltd
Particulars Quarters Tuna Council Department of Total Average of
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fisheries estimates two estimates
Q1
Quarter ended
31/03 35 38 73 36.5
Q2
Quarter ended
30/06 40 39 79 39.5
Q3
Quarter ended
30/09 47 44.5 91.5 45.75
Q4
Quarter ended
31/12 38 40.5 78.5 39.25
Sales budget is termed as company's expectation regarding sales that will be achieved in
effective manner. It is prepared in units and in terms of dollars for the budget period quite
effectually. When organisation has larger quantum of products, then it is better to aggregate sales
which are expected into categories because if it is not done like this way, then estimation
regarding sales becomes way difficult (Sales Budget Definition. 2017). The budget can be
formulated on quarterly or monthly basis. The information with regards to sales are provided by
the personnels who handles daily operational tasks and also from marketing personnel who has
responsibility to promote products in effective manner.
In relation to this, sales budget estimate is prepared for Ocean Fresh Ltd on quarterly
basis. It can be said that estimates of production are being provided by two bodies such as Tuna
industry council and Department of Fisheries. The estimates of these two are taken into account
and average estimates are carried out in effective way. It can be analysed that average production
for Q1 is 36.5, 39.5 for next quarter, Q3 is 45.75 and for Q4 is 39.25. Hence, it can be said that
firm is able to produce in accordance to the average extracted out of two estimation. Thus, sales
budget is effectively prepared for quarters.
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CONCLUSION
Hereby it can be concluded that firm is benefited by preparation of budget in effective
manner. It is required to anticipate income and expenditures so that desired profits can be
attained with much ease. Furthermore, it is beneficial for company as expenses should not
exceed revenue else losses will start occurring. Hence, organisation is able to keep track of costs
for maximizing profits.
REFERENCES
Books and Journals
Maher, M. H., Fakhar, M. S. and Karimi, Z., 2018. The relationship between budget emphasis,
budget planning models and performance. Journal of Health Management and
Informatics. 5(1). pp.16-20.
Xu, Y., Zhang, J. and Pinedo, M., 2017. Budget allocations in operational risk
management. Probability in the Engineering and Informational Sciences, pp.1-26.
Online
Sales Budget Definition. 2017 [Online] Available Through:
<https://www.accountingtools.com/articles/2017/5/17/sales-budget-sales-budget-example>
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