Question

In: Accounting

Domino’s Pizza L.L.C. operates pizza delivery and carry-out restaurants. The annual report describes its business as...

Domino’s Pizza L.L.C. operates pizza delivery and carry-out restaurants. The annual report describes its business as follows:

We offer a focused menu of high-quality, value-priced pizza with three types of crust (Hand-Tossesd, Thin Crust, and Deep Dish), along with buffalo wings, breadsticks, cheesy bread, CinnaStix, and Coca-Cola products. Our hand-tossed pizza is made from fresh dough produced in our regional distribution centers. We prepare every pizza using real cheese, pizza sauce made from fresh tomatoes, and a choice of high-quality meat and vegetable toppings in generous portions. Our focused menu and use of premium ingredients enable us to consistently and efficiently produce the highest-quality pizza.

Over the 41 years since our founding, we have developed a simple, cost-efficient model. We offer a limited menu, our stores are designed for delivery and carry-out, and we do not generally offer dine-in service. As a result, our stores require relatively small, lower-rent locations and limited capital expenditures.

How would a master budget support planning, directing, and control for Domino’s?

Solutions

Expert Solution

Master budget include the following budgets and they individually support in total to achieve the master budget.

a. Direct labour Budget

b. Direct materials Budget

c. Ending finished goods Budget

d. Manufacturing overhead Budget

e. Production Budget

f. Sales Budget

g. Selling and Administrative expense Budget

A. Direct Labour Budget:-

This budget will be used to calculate number of hours,number of employees required to produce the items to be provided.This budget will also be used to anticipate when to use overtime and when to work less time.

B. Direct materials Budget:-

This budget is used to calculate the materials to be purchased that are required for production in order to avoid short falls or over purchasing.

C. Ending finished goods Budget:-

This budget is used to calculate the cost of finished goods to be maintained at the end of the period in order to avoid shortages and also to reduce carrying costs.

D.Manufacturing overhead Budget:-

This budget contains all manufacturing costs like depreciation, salaries, freight, supplies etc.,. This budget helps in managing the above costs.

E. Production Budget:-

This budget is used to calculate the number of units that must be produced or manufactured keeping in view the increase in demand, ending inventory to be maintained, carrying costs etc.,

F. Sales Budget:-

This budget is used to define the number of units expected to be sold during the period. sales would also includes from any subsidiaries or other product lines which would be closed during the current period.

G.Selling and Administrative expense Budget:-

This budget includes all the expenses other than manufacturing expenses like advertising, rent, insurance,marketing,accounting etc.,.This budget helps in reducing the above expenses.


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