Operational Costs and Budget Analysis for Russet Cup Coffee House

This report provides a comprehensive analysis of the Russet Cup coffee house's operational costs and budget. It begins with an introduction outlining the business's objective of increasing revenue and achieving profit margins. The report details the sources of funding, including owner's injection and commercial loans, along with the allocation of these funds to fixed assets and operating capital. A breakdown of start-up expenses, such as salaries, insurance, rent, and advertising, is presented, followed by a list of start-up assets including leasehold improvements and equipment. The report then analyzes both fixed and variable costs, providing detailed tables for each. Finally, the report projects the business's financials, including sales income, variable and fixed costs, and profit. The conclusion emphasizes the importance of quality coffee, efficient operations, and a strong staff as key factors for the cafe's success, highlighting the potential for substantial profit margins due to lower overhead costs.

INTRODUCTION
The business which has been considered for the analysis purpose is the Russet Cup is a kind of coffee
house located in Overland park, Kansas. The main objective of any business is to increase the
revenue on year to year basis and achieve the desired profit margin as required for any business for
the sustenance and growth of business. The company always has the desire to attain the required
profit margin and grow their business on year to year basis. For any company the key mantra to
success for any business involves providing great products to the customer, meeting the
requirement of customer on time. To start any new business the company requires fund to be
infused.
SOURCES OF FUND
The sources of fund which are made available is the owner’s injection, commercial loan and the
usage of such fund involve is in fixed assets and operating capital. The same is presented in the form
of table:
Sources of funds
Sly No Particulars Amount in $
1 Owners Injection 22875
2 Commercial Loan 130000
3 Commercial Mortgage 0
4 Line of Credit 0
Total sources of funds 152875
Usage of Funds
Sl No Particulars Amount in $
1 Fixed Assets 124000
2 Operating Capital 28875
Total usage of funds 152875
START UP EXPENSES AND ASSETS
There is various start up expenses which are required to be incurred initially at the start of business
such as operating capital expense, salaries and wages, insurance premium, legal fees, deposit of
rent, supplies, advertising and promotion, other initial cost and working capital requirement for the
business. The following are summarised in the form of table which are here in below:
Start Up Expenses
Sl No Particulars Amount in $
1 Operating Capital 0
2 Salaries and Wages 0
3 Insurance Premiums 4800

4 Beginning Inventory 0
5 Legal Professional Fees 0
6 Rent Deposit 2075
7 Utility Deposit
8 Supplies 2000
9 Advertising and Promotion 4000
10 Licenses
11 Other initial cost 8000
12 Working Capital 8000
13 Total Start Up Expenses 28875
There are various expenses involved which need to be incurred with respect to assets such as in real
estate, building, leasehold improvement, equipment, furniture and fixtures, vehicles, other start up
assets cost which are also required to be incurred.
Start Up Assets
Sl No Particulars Amount in $
1 Real Estate 0
2 Buildings 0
3 Leasehold Improvements 71725
4 Equipment 38275
5 Furniture & Fixtures 14000
6 Vehicles
7 Other Fixed Assets
8 Total Start up Asset 124000
Total Required Start-up cost 152875
COST ANALYSIS
There are also fixed and variable cost involved in any business which the company need to incur in
order to run the business. The same can be presented in the form of table which are depicted here
in below:
Fixed Costs
Sl No Particulars Amount in $
1 Advertising 8800
2 Insurance 3600
3 Legal & Accounting 816
4 Office Expenses 2000
5 Rent on Business Property 22900
6 Telephone 2800
7 Utilities 5000
8 Salaries 8000
9 Total 53916

Variable cost
Sl No Particulars Amount in $
1 Raw material 20000
2 Salaries 10000
3 Repairs 2200
4 Supplies 9548
5 Telephone 2000
6 Utilities 9400
7 Total 53148
PROJECTIONS OF BUISNESS
The financials of the business Russet Cup has been depicted in the form of table which is presented
here in below:
Sl No Particulars Amount in $
1 Sales Income 250000
2 Variable Cost 53148
3 Contribution 196852
4 Fixed Cost 53148
5 Profit 143704
CONCLUSION
The café house measures its success in terms of increased market share and earning. The company
has a vast market with a huge opportunity. The main keys to success for the same will be ability to
offer quality coffee, taking advantage of the small size and outstanding café staff. The café can offer
some of finest coffee beans from the local vendor. As the café is also not large in size the company
can earn huge margin because of lower overhead.