MASTER BUDGET

Submitted To:
Syeda Humayra Abedin(SHA1)
Lecturer Department of Accounting & Finance
North South University
Course Initial: ACT202
Section:18

SL Name ID
No.

1 Tamjeed Rahman 2231954030

2
Md. Akil Abrar 2233289630

3
Jawad Bin Zilani 2221727630

4 Humayun Kamal
2221759630

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 Letter of Transmittal

13th June, 2024

Syeda Humayra Abedin

Lecturer

Department of Accounting & Finance

School of Business and Economics

North South University

Subject: Submission of Master Budget

Dear Ma’am,

We gave our restaurant a name which is “Burger Hunt”. We reviewed all the details in the term
paper and added some justified assumptions from our perspective. We tried to provide every
product detail, production processes, cost of products, and costing methods of the burger and
also prepared a master budget for the company. We thank you for allowing us to work on the
project. We hope that you will find this report useful. We have tried our best to make the report
as comprehensive as possible.

Thank you

Sincerely,

Md. Akil Abrar 2233289630

Tamjeed Rahman 2231954030

Jawad Bin Zilani 2221727630

Humayun Kamal 2221759630

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 Acknowledgment

First and foremost, we would like to thank the Almighty for allowing us to complete and present
the master budget of Burger Restaurant for 2019 and 2020. The report was written and compiled
based on the knowledge gathered through various methodologies and sources. We would like to
thank our respected faculty, Syeda Humayra Abedin, Lecturer of the Department of Accounting
& Finance, North South University, for her constant support and motivation throughout the entire
journey. His constant faith in our abilities, amongst other much-appreciated emotional support,
acted as a backbone in allowing us to complete the project whilst fulfilling our curiosity about
relating theoretical education to reality. We would further like to thank his patience and constant
availability regardless of our repeated requests and inquiries, without which we would not have
been able to complete the paper. Lastly, we thank each team member for their constant support
and for tackling every hardship we faced. We would like to conclude by acknowledging any and
all lacking that might surface from the report. We humbly apologize for the shortcomings and
hope to present a fulfilling report.

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 Executive Summary

The following analysis is an accounting report on a product of our burger shop called “Burger
Hunt.” It is located on Banani Road 11. In this report, we performed a production analysis of our
restaurant and also prepared a master budget for two consecutive years, 2019 and 2020. The goal
was to illustrate the key changes at our restaurant during COVID-19. The budget we have
calculated is based on anticipation and some basic data provided beforehand. The master budget
includes the sales budget, production budget, direct material budget, direct labor budget,
manufacturing overhead budget, expected cash collection, and payment schedule. The entire
report is divided into two parts. The report starts with brief details regarding the Goodtime
burger’s production process and how we function daily. In the second part, we have shown the
master budget for the burger shop.

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 Table Of Contents

Introduction......................................................................................................................................5
Sales Budget.....................................................................................................................................8
Expected Cash Collection Schedule................................................................................................ 9
Production Budget......................................................................................................................... 10
Direct Materials Budget................................................................................................................. 11
Expected Cash Payment for Direct Materials................................................................................12
Direct Labour Budget.................................................................................................................... 13
MOH Budget..................................................................................................................................14
Selling & Administrative Budget...................................................................................................15
Cash Budget................................................................................................................................... 16
Conclusion..................................................................................................................................... 17

References:.................................................................................................................................... 18

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Introduction

Burger Hunt is a fresh face in Banani, founded by enterprising NSU students. We make juicy
burgers using beef and chicken sourced right here in Bangladesh. Every bite explodes with fresh
flavor that'll leave you wanting more.

Product Details and Pricing Strategy

Targeting students and working professionals, our initial focus was on affordability and high
volume.

Our delicious burgers feature:

● All-natural beef/chicken patty

● Fresh, crisp, whole-leaf lettuce
● Sliced onion
● Ripe tomato
● Melty Swiss cheese
● Decadent truffle mayonnaise
● Classic condiments

Costing Assumptions

For a clear analysis, we categorize kitchen expenses as manufacturing costs. Like service staff,
costs related to the dining area are considered non-manufacturing costs. Additionally,
manufacturing overhead is calculated based on labor hours spent in the kitchen.

Production Process of the Restaurant to Create a Burger

Raw Materials Needed:

Buns
Meat Patties of Chicken and Beef
Vegetables
Cheese

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Ketchup, mustard, mayonnaise.
Spices and Seasonings
Other Ingredients: Optional items like bacon, etc.

Direct Labor Costs:

Chefs: Responsible for preparing and cooking the burgers.
Kitchen Assistants: Help with prep work like chopping vegetables and assembling burgers.
Waiter: Serving burgers to customers
Cashier

Manufacturing Overhead (MOH) Costs:

Utilities: Electricity, water, and gas used in the kitchen.
Depreciation: Wear and tear on kitchen equipment.
Cleaning Supplies: Detergent sanitizers for maintaining kitchen hygiene.
Repairs and Maintenance: Cost of fixing equipment and maintaining the facility.
Miscellaneous Supplies: Gloves, aprons, hairnets, etc.

Master Budget for 2019 and 2020

2018 Data

Selling Price: 210 Taka

Average Burgers Sold Per Month: 390

Annual Sales Growth: 15%

Assumptions for 2019 (Pre-COVID-19):

Annual Sales Growth: 15%
Selling Price Increase: 25%
Raw Material Cost Increase: 8%
Labor Cost Increase: 5%
MOH Cost Increase: 12%

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Selling and Administration Cost Increase: 2%

Assumptions for 2020 (During COVID-19):

Annual Sales Growth: -8%
Selling Price Increase: 18.75%
Raw Material Cost Increase: 10%
Labor Cost Increase: 3%
MOH Cost Increase: 8%
Selling and Administration Cost Increase: 1%

2019:

New Selling Price:

210×1.25=262.5 Taka

Monthly Sales Volume:

390×1.15=448.5 burgers

2020

● The Budget sales Decreased by 20%.

● The selling price per unit was decreased by 5%

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 Sales Budget

2019 2020

Budgeted sales (units)

5382 units 4306 units

Selling price per unit

262.5 Taka 249.375 Taka

Total budgeted sales

1,412,025 Taka 1,073,809 Taka

Assumptions for Sales Budget-

In the year 2019

● Monthly Sales Volume:390×1.15=448.5 burgers

● Budgeted Sales:448.5×12=5382 burgers
● New Selling Price:210×1.25=262.5 Taka
● Total Budgeted Sales:5382×262.5=1,412,025 Taka

In the year 2020

● The Budget sales Decreased by -8% = (390*12) + (-8% of 390*12) = 4306 Burgers
● The selling price per unit was increased by 18.75%=210 + (18.75% of 210) =249.375
Taka
● Total Budgeted Sales-
4306 burgers x 249.375 taka=1,073,809 Taka
In general, the annual sales grew by 15% on average, but in 2020, due to COVID-19, our annual
sales growth declined by 8% as the number of customers declined.

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The selling price generally increases by 25% annually, but in 2020, we could increase our selling
price by only 18.75% due to less demand.

Expected Cash Collection Schedule

2019 2020

Beginning A/C receivable - -

1,412,025 Taka 1,073,809 Taka

Total Cash Collection

Assumptions-
All of our transactions are in cash and full payment. Our customers pay the full amount while
ordering. That's why we don't have any accounts receivables.

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 Production Budget

2019 2020

Budgeted sales (units)

5382 units
4306 units

Add: Ending inventory

- -

Total units
5382 units
4306 units

Less: Beginning inventory

-

Total units to be produced

5382 units
4306 units

Assumptions –
Burgers were prepared after getting an order. So, the finished goods had no ending or beginning
inventory units. Hence, total budgeted sales became our required production value in units.
Hence, the production required will be the same as the total production needed.

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 Direct Materials Budget

2019 2020

5382 units
Total Units to be produced 4306 units

RM needed per unit 0.15 kg 0.15 kg

Total RM needed 807.3 kg 645.9 kg

Add: Extra ending Inventory 20 kg 25 kg

Total RM 827.3 kg 665.9 kg

Less: Beginning Inventory (12 kg) (20 kg)

Total Production 815.3 kg 645.9 kg

Cost per unit 120 Taka 150 Taka

Total cost of RM 97,836 Taka 96,885 Taka

Assumptions-

● Raw materials costs generally increase by 8%, but the costs increased by about 10% in
2020 due to COVID-19, as the supply of the materials was less and the demand was high.
● Raw Materials Needed to Make Burger:
1. Buns: 45 gm
2. Meat Patties of chicken and beef - 75 gm
3. Vegetables- 10 gm
4. Cheese -15 gm
5. Ketchup, mustard, mayonnaise - 2 gm

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 6. Spices and Seasoning 0.5 gm
7. Other Ingredients like bacon, mushroom, etc 2 gram
We have assumed that an average of about 0.15 kg of raw materials is needed for each
burger.
● 20 kg of raw materials were left in 2019 as ending inventory. Those 20kg of raw
materials were used as beginning inventory in 2020.

Expected Cash Payment for Direct Materials

2019 2020

Beginning A/C payable - -

Cash Payment for DM 97,836 Taka 96,885 Taka

Assumption-
We had to pay our due payments within the same year, so we did not have any beginning
accounts payable.

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 Direct Labour Budget

2019 2020

Units to be produced 5382 units 4306 units

Direct Labor Hours 0.5 hrs 0.25 hrs

Labor Hours required 2691 hrs 1076.5 hrs

Guaranteed Labor Hours 4320 hrs 2160 hrs

Salary Per Hour 29.17 Taka 44.44 Taka

Total Direct Labor Cost 126000 Taka 95990 Taka

Assumptions-

● Direct Labor Hours-

2019- 12 hrs per day - 12/24=0.5hrs
2020- 6 hrs per day - 6/24= 0.25hrs

● Guaranteed Labor Hours-

2019- 12 hrs per day (10 am-10 pm)
2020- 6 hrs per day (12 pm-6 pm)

● Salary-
2019- After 5% increase (10000*5%)= 10500 per month/350 per day/29.17 per hour

2020- 23.80% decreased due to covid situation 10500-(10500*23.80%)= 8000 per

month/ 266.67 per day/ 44.44 per hour

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 We assumed that during COVID, Working hours are comparatively lower than usual. We
have also increased the salary because of the shortage of workers during COVID-19.

MOH Budget

2019 2020

Units to be produced 5382 units 4306 units

Variable MOH O/H Rate 10 Taka 8 Taka

Variable MOH Cost 53820 Taka 34448 Taka

Fixed MOH 819840 Taka 699360 Taka

Total MOH Cost 873660 Taka 733808 Taka

Less: Noncash 36000 Taka 36000 Taka

Total MOH Cost 837660 Taka 697808 Taka

Assumptions:

● Variable MOH Rate 2019- BDT 10 for each unit

2020- BDT 8 for each unit

● Fixed MOH
2018- 30000+18000+3000+10000=61000 taka - Given
2019- 61000*12%=68320 taka
2020-
I. Rent 68320*12%= 37200taka- (12% increased)
II. Utility 10080 Taka (as operations hours decreased)

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 III. Depreciation 3000 taka
IV. The salary of a waiter is 8000 taka ( Salary decreased by 23.80%)

Selling & Administrative Budget

2019 2020

Budgeted Sales 5382 4306

Variable Selling & Admin cost - -

Rent 367200 Taka 370872 Taka

Utility 220320 Taka 222523 Taka

Salary 122400 Taka 123624 Taka

Total Selling & Admin 709920 Taka 717019 Taka

Less: Noncash 36000 Taka 36000 Taka

Cash Disbursement 673920 Taka 681019 Taka

Assumptions:

● Salary of waiters 10000, Rent 30000, Utility 18000, Depreciation 3000

● In 2019, Selling & Admin increased by 2%

● In 2020, Selling and Admin. increased by 1%, which is 1% less than in 2019 because of
the COVID situation. The selling and administrative comparatively decreased during the
covid period.

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 Cash Budget

2019 2020

Beginning cash balance 600000 Taka 226609 Taka

Add: Cash Collections 1412025 Taka 1073809 Taka

Total Cash Available 2012025 Taka 1300418 Taka

Less: Cash Disbursements

Direct Materials 97836 Taka 96885 Taka

Direct Labour 126000 Taka 95990 Taka

Manufacturing Overhead 837660 Taka 697808 Taka

Selling & Admin Cost 673920 Taka 681019 Taka

Equipment Purchase 50000 Taka -

Cash Balance 226609 Taka (271284) Taka

Financing

Loan - 300000 Taka

Interest - -

Repayment - -

Ending Cash Balance 226609 Taka 28716 Taka

Assumptions:
We maintained a cash balance of Tk. 226609 in 2020. Borrowing is done at 10% annual interest
in 2020. The loan payment and interest amount will be paid next year. The cash balance to start
the year 2019 was Tk. 600,000.

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Conclusion

This master budget analyzes Burger Hunt's operations for 2 years (2019 pre-COVID & 2020
during COVID). Sales thrived in 2019 (15% growth) but dipped in 2020 (8% decline). While we
raised prices in both years, the 2020 increase was smaller to stay competitive. Costs generally
rose, with a steeper incline in 2020 due to COVID's impact on supplies and staffing. The positive
cash flow in 2019 turned negative in 2020, requiring a loan to cover the deficit. This budget
highlights the importance of financial planning for restaurants and offers Burger Hunt valuable
insights to improve profitability in the future.

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References:

Haider, M. M. C. a. M. H. (2020, May 4). Restaurant business and a pandemic. The Daily Star.
https://www.thedailystar.net/lifestyle/cover-story/news/restaurant-business-and-pandemic
-1899493

Siddiqui, K. (2021, August 26). Restaurants on path to recovery. The Business Standard.
https://www.tbsnews.net/dropped/industry/restaurant-sector-path-recovery-293239

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