Devry BUSN278 Budgeting and Forecasting – Course Project + Weekly Discussions + Midterm Exam

BUSN 278
Budgeting and Forecasting – Course Project + Weekly Discussions + Midterm Exam
Week 4 Midterm
Exam
BUSN278 Course
Project (Papa Geo’s Restaurant)
Project
Overview:
This is an individual project where you will be acting as a
consultant to an entrepreneur who wants to start a new business. As the
consultant, you’ll create a 5 year budget that supports the entrepreneur’s
vision and strategy, as well as the needs for equipment, labor, and other
startup costs.
You can choose from one of three types of new business startups —
a landscaping company, a restaurant, or an electronics store that sells
portable computing devices. Each business has its own Business Profile detailed
in the sections below. The purpose of the Business Profile is to guide you in
understanding the scope of the business, the entrepreneur’s startup costs, and
financial assumptions.
The project requires you to create a written budget proposal, a
supporting Excel Workbook showing your calculations, and a PowerPoint
presentation summarizing the key elements of the budget proposal, which you
assume will be presented to a management team.
This is an individual project. Each week you will complete a
section of the project in draft form. In Week 7, you will submit the final
version of the project’s Budget Proposal, Budget Workbook, and Budget
Presentation in PowerPoint.
Deliverables
Schedule / Points
Week
Deliverable
Points
1
Section 1.0 Executive Summary (Draft)
10
2
Section 2.0 Sales Forecast (Draft)
10
3
Section 3.0 Capital Expenditure Budget (Draft)
10
4
Section 4.0 Investment Analysis (Draft)
10
5
Section 5.1 Pro Forma Income Statement (Draft)
10
6
Section 5.2 Pro Forma Cash Flow Statements (Draft)
10
7
Final Budget
Proposal
90
7
Final
Presentation w/ PowerPoint
30

Total project
points
180
Business Profile:Papa Geo’s– Restaurant
Vision
The vision of the entrepreneur is to create a single-location,
sit-down Italian restaurant called Papa Geo’s. The goal is to generate an
income of $40,000 per year, starting sometime in the second year of operation,
as wells as profit that is at least 2% of sales.
Strategy
a) Market
Focus/Analysis
The restaurant targets middle to lower-middle class families with
children, as well as adults and seniors, located in Orlando, Florida. The area
within 15 minutes of the store has 10,000 families, mostly from lower to middle
class neighborhoods. Average family size is 4 people per household. There is no
direct competition; however, there are fast food restaurants like McDonald’s,
Taco Bell and Wendy’s in the geographical target market. The lower to middle
class population is growing at about 6% per year over the next five years in
this area.
b) Product
The product is Italian food served buffet style, in an
all-you-can-eat format, with a salad bar, pizza, several different types of
pasta with three or four types of sauces, soup, desserts, and a self-serve soda
bar. The restaurant is also to have a 500 square foot gaming area which has
game machines that children would be interested in using.
c) Basis of
Competition
Customers come to this restaurant because of the good Italian food
at a low price – you can get a meal for $7, including drinks. Customers also
eat at Papa Geo’s due to the cleanliness of the facility, the speed of getting
their seat and food, and the vending machines which keep the children busy
while adults enjoy their meal.
Startup
Requirements*
Given Costs
· The cost of registering a limited liability company in Florida –
filing fees listed at the bottom of the application for located at:
http://form.sunbiz.org/pdf/cr2e047.pdf
· Renovation of the facility expected to cost $15,000
· Business insurance, estimated at $1,000 per year
· Health and other benefits are 20% of the salaries of the manager
and assistant manager
Costs you should
estimate through research, experience or other methods
Soda fountain bar 2 pizza ovens Salad and pizza/dessert bar
Approximately 100 square foot commercial refrigerator 2 cash registers 6 video
game vending machines Management office with desk and lower-priced laptop
computer Staff lunchroom equipment such as microwave, sink, cupboards and
refrigerator 20 four-seater tables with chairs Busing cart for transporting
dirty dishes from the dining area to the dishwashing area 140 sets of dishes,
including cutlery and drinking cups Commercial dishwasher Miscellaneous cooking
and food handling equipment like trays, lifters, spoons, pots etcetera The cost
of an average of 7 employees on the payroll. All operating costs, such as
advertising, rent for a 3,500 square foot facility with male and female
washrooms (already installed), utilities, maintenance, and annual depreciation
*If you have questions about startup requirements, or think other
startup costs necessary for the business are missing, then make an assumption
and state it in the relevant section of the report.
Given Financial
Assumptions*
The owner will be granted a loan for the initial startup,
repayable over 10 years at current interest rates for small business loans. The
owner will use personal funds to operate the business until it generates enough
cash flow to fund itself. Essentially, all sales are made by credit card. All
credit card sales are paid to the restaurant daily by the credit card company.
2.5% of sales is paid to the credit card company in fees. Food suppliers give
30 days of trade credit. Inventories are expected to be approximately 10% of
the following month’s sales. The average meal costs $4.00 in materials and
labor. The average family spends $4.00 on vending machine tokens. Equipment is
depreciated on a straight-line basis over 5 years. Managers have health
benefits, other workers do not. The company will operate from 10:00 am to 9:00
pm, 7 days a week. The entrepreneur will manage the store and draw a salary.
Every shift has one person on the cash register, one keeping the food bars
stocked with food, two cooking the food, one on busing and table cleaning, a
manager, and assistant manager.
*If you believe any other assumptions are necessary, please state
them in your budget proposal.
All 7 Weeks
Discussions BUSN278
w1 dq1 Budgeting and Planning
w1 dq2 Forecasting Techniques
w2 dq1 Linear Regression
w2 dq2 Seasonal Variations
w3 dq1 Revenue Budget
w3 dq2 Capital Expenditures Budget
w4 dq1 Capital Budgeting
w4 dq2 New Business Startups
w5 dq1 Master Budget
w5 dq2 Cash Budgeting
w6 dq1 Cost Behavior
w6 dq2 Variance Analysis
w7 dq1 Administering the Budget
w7 dq2 Presenting and Defending a Budget