McDonald's Corporation Break-Even Analysis and Planning

Prepare a realistic flexible budget for next year for the McDonald's Corporation using economic and company trends. Use three different growth rates (low, average and high) for sales and adjust the expenses based on whether you assume that they vary with the sales activity or not.

You may wish to consider these questions in reaching your assumptions:

How did sales trend over the past three years? Expenses?

How did this trend compare to the general economy? Competitors?

Consider current interest rates and taxes.

After you have created the flexible budget, discussion what you have learned about the firm. Also, respond to these:

Contrast the flexible budget from a static budget.

How can you use the flexible budget prepared for planning and control.

Would you use a flexible budget for performance evaluations? Explain.