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Panera Bread Company: Flexible budget Three levels

You will prepare a flexible budget for next year for the company of your choice (A bakery is my choice). The budget needs to be realistic and based on corporate and economic trends.

Set up the flexible budget at three levels for the income statement. Companies prepare budgets based on absorption and/or variable costing. Due to lack of information, we're limiting our budgeting to the absorption approach. You still need to estimate cost behavior based on trends.

Information to consider in determining the three levels.

What is the growth rate in sales for the past three years?
What is the current growth rate in the economy?
How are the competitiors doing?
Current interest rates and tax burdens.
Discuss the implications of the information after you have completed the flexible budget.
What did you learn ; and
How can you use this information as a manger?

Modular SLP Expectations

Always include the name or the organization(s), time period covered and source of information. It is important to answer the questions as posed. The discussion should be two to four pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.

Solution Preview


I have created a flexible budget for PANERA BREAD COMPANY (attached in Excel) which shows three levels of flexible budget. That is, there are three levels of expected activity and the expenses and revenues are adjusted to conform to expectations given those levels of activity.
What is the growth rate in sales for the past three years?

Review of Panera's 2011 financial statement (annual report from shows that sales were up by 20% in the most recent year. They have been the beneficiary of two large macro trends : desire for better nutritional choices and down-grading from expensive restaurants. By being high quality food and modest cost, they have stolen market share. I expect that this will probably continue as healthy trends continue and the economy grows too slow for diners to upgrade back to ritzy culinary options. So, I have assumed "low"? as 5% increase, middle as the current growth of 20% and high of 30% growth.

What is the current growth rate in the economy?

The current growth rate in the economy is closer to 2% and Panera is clearly exceeding the overall economy by orders of magnitude. The reason is that they are benefitting like McDonalds from people having to downgrade from ...

Solution Summary

Your tutorial is 714 words plus a flexible budget for Panera Bread Company in Excel (see attached, click in cells to see computations) for three levels of sales. The flexible budget is based on 2011 actual Panera results.