Finance

The London Docks Café

is a company that prepares
meals for tourists and citizens in its kitchen located next to the local
airport. The company’s planning and actual budgets for September appears below:

The London Docks Café

Planning and actual budgets for the month ended September
30th, 2020

                                                                

                                                                 PLANNING              ACTUAL

Budgeted meals quantity           (q)                 20 000                      18
000

Revenues (£5.00q)                                   £100 000                  £90
000

Expenses:

Raw material (£2.50q)                              50
000                      45 000

Wages and salaries (£5 500+£0.25q) 10 500                      10 000

Utilities (£2 500 + £0.05q)                          3 500                       
3 400

Facility rent                                                 5 000                       
5 500

Insurance                                                   2 800                       
3 200

Fuel                                                            2 500                       
2 800

Net Operating Income                            £25
700                    £20 100

Required:

a)   
Outline the objectives of budgeting and explain how London Docks Café
benefits from engaging in robust budgetary processes?
(15 marks)

b)    Prepare a report
showing London Docks Cafe’s revenue and spending variance for September?
(20 marks)

c)    Based on the variances
report you prepared in (b) above, which area/s of  activity should be of concern to the
management of London Docks Café? Explain (25 marks)

d)   
Explain the terms profitability and sustainability. Assess and advise the
London Docks Café on the measures they should adopt to ensure the attainment of
both mandates.
(30 marks)