Pappadeaux Restaurants - San Diego Term Paper

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33% of total sales (projected at $900,000). Actual insurance and taxes came to 4% for the year. This is mostly due to a local business tax increase.

Recommendations

Insurance and taxes expense should be calculated at 4% of total budgeted sales.

With a recommended sales budget of $900,000, this expense should be $32,000 ($900,000 X.04).

Rent

Analysis

Rent is established by corporate headquarters, and it is a fixed expense. An unexpected $10,000 increase in rent resulted in rent coming over budget by $10,000.

Rent was expected to amount to $50,000; however, actual costs amounted to $60,000, as directly imposed by corporate headquarters.

Recommendations

The budgeted amount for the next fiscal year's rent expense should be $60,000, which includes the current rent increase without any envisioning of another.

Supplies

Analysis

Budgeted expenses for supplies amounted to $18,000, 2% of total sales ($900,000 X.02). Actual expenses came to $14,000, $4,000 under budget (1.75% of sales). Supplies are purchased locally. This is a variable expense dependent upon sales.

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Recommendations

The supply budget should still be 2% of total budgeted sales in order to compensate for cost increases in supplies.

In addition to the 2% of total sales, an additional $5,000 should be budgeted to fund the customer mailing list campaign to purchase envelopes, labels, and postage, and to pay for printing of coupons for direct and indirect mailing. More return customers mean more sales! The total supplies budget for next year should be $23,000 ($900,000 X.02 + $5,000).

Corporate Overhead

Analysis

Corporate overhead is not controllable by the San Diego No. 1 location. This is a fixed expense imposed on the location by the corporate Pappadeax office. Expenses this year were largely over the projected budget of $90,000. Actual corporate overhead costs amounted to $120,000 - over budget by $30,000. Increased expenses are due to a new computer system installed at corporate headquarters.

Recommendations

In order to account for this year's unknown overhead hike, the next year's budget.....

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