1. Briefly explain the benefits to be derived by a company if they switch from an incremental budgeting system to a zero-based budgeting (ZBB) system. Your answer must be in your own words, which will require that you be succinct with your response.
2. ACME Enterprises is a successful new company which has turned a strong profit during its first year of operation. The company realistically predicts ongoing profitability for the foreseeable future. Given this bright forecast, should ACME’s management team engage in cash flow budgeting? Briefly explain, which will require that you be succinct with your response.
3. A restaurant has an average cheque of $14.90, with an average variable cost of $9.81. Fixed costs are $381,000 for that year, and the owner wants to realize a profit of $77,181 a. Calculate the contribution margin per cheque? b. Calculate the contribution margin as a percentage? c. Calculate is the variable cost percentage? d. H ow many cheques are required to achieve the targeted profit level? e. What sales revenue is required to achieve the targeted profit level?
4. The daily fixed cost of the banquet department of a hotel is $681. A customer selected a menu for 100 persons that would have a food cost of $10.25 per person, a variable wage cost of $4.50 per person, and other variable costs of $2.81 per person. a. Calculate the total cost per person if this banquet was booked.