Question

Jupiter's Pizzeria & Billiards is a sports-minded pub with pizza, a large beer selection, pool tables and a handful of arcade games. Jupiter's Pizzeria & Billiards had budgeted revenues for last year of $41,500, and budgeted expenses of $31,250. The pub’s sales last year were $43,100 and its expenses totaled $30,700.

The estimates made by the Jupiter's Pizzeria & Billiards manager are as follows:

Jupiter's Pizzeria & Billiards’ sales will increase by 3.2% this year.

Jupiter's Pizzeria & Billiards’ expenses will increase by 2.4% this year.

Jupiter's Pizzeria & Billiards’ manager assumes a target food cost of 30%.

Jupiter's Pizzeria & Billiards’ manager forecasts the labor cost for this year will be $9,400, and she assumes last year’s payroll allocation of 8.75% will not change.

What is Jupiter's Pizzeria & Billiards’ forecasted food cost for this year?

What should Jupiter's Pizzeria & Billiards’ managers budget for payroll allocations?

Jupiter's Pizzeria & Billiards’ manager is concerned about the pub’s accounts receivable. The pub currently has $5,000 in accounts receivable, with aging of accounts as 45% in less than 30 days, 40% in 30-60 days, 10% in 60-90 days, and 5% in 90+ days. What dollar amount of the pub’s accounts receivable can Jupiter's Pizzeria & Billiards’ manager expect to receive 30-60 days from now?

Answer 1

	Forecasted food cost
	Actual Sales last year	$43,100
	Actual Expense last year	$30,700
	Forecasted sales this year	$44,479	(1.032*43100)
	Forecasted expenses this year	$31,437	(1.024*30700)
	Target Food Cost (30%)	$9,431	(0.30*31437)
	Forecasted food cost this year	$9,431
	Budget for payroll allocation:
	Budget for Payroll allocation (8.75%)	$        2,751	(0.0875*31437)
	Account Receivable
	Current accounts receivable	$5,000
	Less Than 30 days	$2,250	(0.45*5000)
	Between 30 and 60 days	$2,000	(0.4*5000)
	Between 60 and 90 days	$500	(0.1*5000)
	More than 90 days	$250	(0.05*5000)
	Amount expected to be received in 30-60 days	$2,000