Oanh

ESTIMATION OF SALES LEVELS, COSTS AND PROFIT – REVISION

‘al fresco’ sandwich bar – operates just down the road in Clerkenwell. ’al fresco’ is usually open 9-6pm Monday to Friday. It has a delivery service for order over £6 to the local area which operates by moped. It sells higher quality ‘made to order’ sandwiches and snacks at a ‘premium price’.

TASK ONE: Decide what sorts of costs these are. Some direct and indirect are debateable.

Cost | Fixed or variable? |

Mortgage on the property | |

Wages of 2.5 full-time staff | |

Electricity for heat & lighting of the premises etc | |

0.5 manager (50% of one workers time) | |

Electricity used in cooking | |

Bread, sandwich ingredients, coffee, tea, soft drinks | |

Bags and packaging materials | |

Telephone line rental | |

Telephone line charges | |

Furniture | |

Production of 10,000 publicity leaflets | |

Moped | |

Fuel for the moped | |

Accountants fees | |

Hourly paid extra staff employed at peak times | |

Premises insurance | |

Kitchen equipment | |

Business rates – tax paid to the council on premises | |

V.A.T. – the tax paid sandwiches eaten in the shop | |

Repayments of, and interest paid on bank loan | |

DRAWING A BREAK-EVEN CHART

‘al fresco’ sandwich bar has the following costs and revenues:

* The average sandwich price of a sandwich is £1.50

* Fixed costs per week are now £350

* Variable costs per sandwich are still £0.50

TASK TWO: Use the information above to complete the table below:

Output and profit/loss per week for the ‘al fresco’ sandwich bar (£)

Output | 0 | 100 | 200 | 300 | 400 | 500 | 600 | 700 |

Sales Revenue | | | | | | | | |

Fixed costs | | | | | | | | |

Total variable costs | | | | | | | |...