Reference no: EM134013860

Question

Part A - Monitor and assess progress of operational plan

This is a continuation of the scenario in Assessment 3. Assume that prior to the kick-off of the initiative, the following expense ratios (costs as percentage of sales) were agreed upon for the catering operations as financial performance indicators for achieving breakeven: Labour cost as a percentage of sales - 28% Food and beverage cost as a percentage of sales - 46% Overheads cost as a percentage of sales - 26% In order to reach a profit, these costs must be even lower. It is now 5 weeks since the start of the offsite catering service and you have noted the status of Pesto's Catering services is as follows: The initial estimated covers for achieving breakeven were 6 parties in a month, of approximately 80 covers at an average spend per cover excluding GST = $80.00. In the month that Pesto's catered for 6 parties, there were a total of 420 covers. Turnover for that month was more than the forecast and it should have meant that Pesto's not just achieved break even, but made a small profit. However, two of the financial indicators (food and beverage, and labour costs).