Reference no: EM133189421
SITXFIN004 - Prepare and monitor budgets
Assessment 1 - Develop Operational Budget & Plan
Part A
Scenario:
VIT café has been operating for the last 2 years and they are going into their third year of operation.
The owner of VIT café is estimating that they will turn over $500,000 however they are not sure of what their outgoings are.
So, the owner of VIT Café needs some assistance from you to prepare their budget for the New Year.
You are required to prepare a budget draft for all the outgoings for the VIT café based on the following table:
As part of your budget preparation, the owner of VIT café has also requested that you write a report
(2-3 pages) including the following:
I. Identify and interpret the data provided above to help with your budget preparation.
II. Estimate monthly income and expenditure with valid, reliable and relevant information.
III. How you could reflect organisational objectives within the draft budget.
IV. Analyse and discuss the internal and external factors for potential impact on budget.
V. List the people you would consult with that could contribute to the budget planning process
when preparing your budget.
Refer to the following web site to assist you in writing the budget draft.
You must include your assessor in your planning process, ensuring your assessor has options to contribute as required.
Part B: Prepare draft budget
Now fill in the Projected budget draft below
Part C: Analyse and negotiate
This part of your assessment requires you to analyse internal and external factors that impact budget outcomes and requires you to also negotiate budgetary requirements according to an organisations budget policies and procedures. Read the case study and analyse the Café's projected annual expense than answer the questions that follow.
Case study
In 2017 you worked closely with the stakeholders and management of the VIT café and drafted up a projected annual expenses budget for that year. You are now analyzing and comparing the budget with the actual figures for 2017 and have found quite a few concerns. The actual figures reflect internal and external factors that have had a significant impact on the outcome of the forecasted budget.
You analyse the VIT budget further and identified complex ideas and concepts.
• What areas of the business have blown budget?
• What could be the internal and external factors for this happening?
• How can these factors affect the budgetary requirements of the VIT café?
• What contingencies might you consider ensuring these internal and external factors are addressed in future budgets?
• Who would you negotiate these budget changes with?
• Why would you negotiate these budget changes?
• Describe three (3) policies and procedures that support budget negotiation practice at your workplace or a workplace that you are familiar with.
• What types of information might be found in a budget that deals with complex ideas and concepts
Assessment 2 - Update Budget & Plan
Part A: Present Budget Draft
You are to arrange a meeting time and date with the owner of VIT café (assessor who will play the role of the owner of VIT café) to discuss your draft budget. The purpose of this meeting is to:
• Present your budget and negotiate your budget for approval
• Discuss any changes with income and expenditure priorities with the VIT owner
• Compromise where appropriate, and include changes as negotiated with your manager
Part B: Final budget
After your meeting, you will be required to complete your final budget (that incorporates the outcomes of your meeting) and produce a short summary report (500-600 words). This report should:
• Outlines any ramifications of your budget modifications
• Detail how you would allocate your funds as outlined in your budget
• Detail how you would keep your colleagues and stakeholders informed of your budget (ensuring you promote awareness of the importance of budget control)
• Detail how you would maintain all records of resource allocation.
Assessment 3 - Monitor and Review Budget.
STUDENT INFORMATION: Study the following Profit and Loss Statement.
VIT Café has now been operating for three years, see their budget and results below, please firstly calculate totals and variances for year 3, then follow the instructions on the following page to complete the budget forecast for Year 4 and 5.
VIT CAFÉ PROFIT AND LOSS STATEMENT Year 3
Task
Please review the actual and budget figures for year 3 in the table above.
Students need to complete year's 4 & 5 budgets in the table given with the following instructions.
1. In Year 4 the café is expected to increase sales by 15 % from year 3. Can you calculate what would be the amount?
2. In Year 5 the café is projected to increase sales a further 20 %. Can you calculate what would be the amount?
3. What are some possible reasons that Year 3 produced such an unsatisfactory trading result against budget? List at least five.
4. What might have accounted for Year 3 having higher wages in comparison to the budget?
5. At the beginning of Year 4 the landlord suddenly increases the rent by 10% and in Year 5 the rent will further increase by another 10%. To what extent will this impact on the net profit figure?
6. Due to an increase in sales of 15% from year 3 to year 4 and a 20% increase from year 4 to year 5 you need to also take into consideration all of your other expenses as well and make the appropriate adjustments for your budgets
Assessment 4 - Written Assessment
1 Define the following Budgeting Terms:
Zero-based budgeting
2 Top-Down Budgeting
3 Rolling Budget
4 Variance
5 Cash Budget
6 Cash flow budgets
7 whole of organisation budgets, departmental budgets
8 Event budgets, project budgets
9 Purchasing budgets
10 Sales budgets
11 Wage budgets
12 Explain the role and the purpose of a budget and who would you need assistance from?
13 Describe the following 4 different types of budgets, and their purposes.
REVENUE BUDGETS
EXPENSE BUDGETS
CASH BUDGETS
CAPITAL EXPENDITURE BUDGETS
14 Describe 6 main pieces of information you will need in order to prepare a project budget
15 What is performance reporting? Why is this an important part of the budgeting process?
16 Describe 4 different reporting cycles that impact on budget and cash-flow
17 List 2 different computerised accounting packages available for the Hospitality Sector?
18 Describe how accounting software programs can help prepare and monitor your budgets
19 List and describe 3-4 potential external factors that should be taken into consideration when planning and preparing a budget.
20 List 6 internal factors you could analyse whilst preparing your Budget. Briefly state how they might impact on your budget planning.
21 Describe the 7 steps involved with the budgetary planning process for a large company
22 Describe how each of the following Internal and external factors impact on budget development.
Growth or decline in economic conditions
Human resource requirements
New legislation or regulation
Organisational and management restructures
Organisational objectives
Shift in market trends rends
Significant price movement for certain commodities or items
Supplier availability and Cost
23 Describe where you would find the following data and how it impacts budget preparation?
Competitor research
Customer or supplier research
Declared commitments in areas of operation
Financial information from suppliers
Financial proposals from key Stakeholders
Income and expenditure for previous time periods
Departmental event or project budgets
Grant funding guidelines or limitations
Management policies and procedures
Organisational budget preparation guide lines
Performance information from previous periods
24 What is Regression analysis?
25 Outline 9 different expenditure and revenue items that are relevant to budgeting and forecasting?
26 It is not always appropriate to base sales forecasts on current sales trends. State 3 examples of factors besides overall demand for your product which could impact on sales in the future.
27 Describe and compare the following forecasting techniques
Time series forecast
The Delphi Method
Executive Opinions Forecasting
28 List 3 common features and assumptions that are inherent in forecasting, regardless of the method used?
Attachment:- Prepare and monitor budgets.rar