Project: Dave's Donuts
Dave's Donuts is in the Quick Service Restaurant (QSR) Industry. This industry is known for fast food and minimal table service. The company has three operating segments 1) Company stores, 2) Dave's Distribution and 3) Dave's Healthy Snacks.
Company Stores are smaller stores where customers can purchase donuts, coffee, and ice cream. These stores have 6 tables with seating options for 4. Customers are greeted by donut associates and can select a variety of donuts from the donut case. Donuts are made fresh in the morning and as supply gets low will be restocked. Company stores serve the general public as well as take larger orders from businesses and schools in the surrounding areas.
Dave's Distribution distributes donuts, coffee, ice cream, and donut mix to local stores in the area. Donuts and ice cream are made in the Company stores and are packaged for distribution. Dave's Distributions, mainly serve convenient stores, supermarkets, and grocery stores. Deliveries are made three times per week.
Dave's Health Snacks provides healthy snack options to consumers who prefer healthier ingredients. Snacks include grain bars, dried fruit, and nuts.
Requirements:
Using a spreadsheet, perform the following requirements. Note: Formulas must be included in your spreadsheet. Spreadsheet must be neatly organized and easy to follow. All assumptions and rationale for method of approach must be documented and included in the respective requirement.
Requirements:
1. Compute the contribution margin ratio for the company as a whole for the years 2015, 2014, and 2013 using data provided. What does the contribution margin ratio mean?
2. Compute the annual break-even point in dollar sales for the company as a whole for years 2015, 2014, and 2013. How close is the company to breaking even in terms of dollar sales?
3. Compute the break-even point in dollar sales for each business segment for fiscal 2015. What are you assuming about the sales mix?
4. Management included a sales forecast for 2016 and 2017 sales. Using management's sales projections, estimate operating profit as a whole for 2016 and 2017. Sales projections for 2016 and 2017 are 15% and 20% of sales respectively.
b) What are you assuming about the company cost structure in 2016 and 2017?
5. What business segment(s) should management emphasize in 2016 and 2017? Why?