Reference no: EM133135358

SITXFIN003-Manage finances within a budget

Question 1:

1 Briefly describe the following types of financial records a business may use. (20-30 words each)
a) Bank Deposit Documentation
b) Bank Statements
c) Banking Summaries
d) Business Activity Statements
e) Cheque Books
f) Credit Card Transaction Statements
g) Invoices
h) Journal Entries
i) Labour And Wages Reports
j) Merchant Statements
k) Merchant Summaries
l) Transaction Reports

2 Note the key components of the following types of budgets. The first one has been done for you as an example:(20-30 words each)
Budget
Cash budget
Cash Flow budget
Departmental budget
Wage budget
Project budget

Event budget
Sales budget
Purchasing budget
Whole Of Organisation Budgets

3 Indicate whether the following statements in regard to business budgets are true or false:

a. Budgets may contain Sales Revenue, Cost of Goods Sold
(COGS), Wages, Rent, Electricity, and other components
b. Capital expenditure budgets must include superannuation,
payroll tax, etc.
c. Budgets can be managed through accountancy software
programs such as Xero, MYOB and Cashwhiz
d. Large businesses may have a budget committee or external
advisers to assist in compiling the total budget
e. Master budgets incorporate only the revenue generating
departments of a business
f. Upcoming projects must be budgeted for to ensure the
project is viable

4 Briefly explain the key information found in the following types of reports: (5-10 words each)

Type of report

Cash flow reports

Occupancy reports

Sales reports

Variance reports

Expenditure reports

Covers reports

Stock reports

Wastage reports

Purchase summary reports

Statistical reports

5 What is involved in an organisation's financial reporting? When are the financial reports issued? Your response should be limited to 60 words.

6 Briefly explain the following methods to maximise budget performance and mention one risk involved in each method:
• Reducing costs
• Increasing revenue

7 Give five reasons why budgetary control is important.

8 What is involved (step by step) in the review process of analysing a budget that has not achieved the projected targets set by management?50-70 words

9 Name accounting program software you can use to help manage budgets. Describe its features.

10 Why is it important to keep detailed records of resource allocation?

11 State two conditions for cost control to be an effective way to increase a company's profitability.

Assessment 2 - Project and Role Play

Part A- Prepare budget based on agreed priorities

You work as the Restaurant Manager for a busy restaurant and function centre.

Recently, the owner and the accountant have prepared a quarterly budget actuals for the months of July, August and September 201X, given below:

The owners have studied the budget and have made the following notes:

• They are not very happy with the performance and would like the business to earn profit margins of more than 25%.

• As the Restaurant Manager, they think you are the best person to work on the profit and loss budget for the next quarter, which is traditionally the busiest season for the restaurant business.
• From experience, the owners know that there will be anapproximately 15% increase in the function sales during the peak season in November and December with Cup Day and Christmas Function Bookings.
• The owners are happy to allocate $10,500 for marketing costs to promote their business during and get more business in the next three months.

Task 1. You must:
• Review the quarterly budget actuals given in the scenario, and prepare a draft monthly P/L budget for the October - December 201X quarter.
• Allocate funds according to thepriorities indicated by the owners.
• You may make expenses and income projections, based on the sales and expenses given in the Profit and Loss Statement for1st July 2019 to 31st September 2019, and average those figures over the three months, except where the seasonal increase in sales and expenses is indicated.
• Expenses such as rent, telephones, utilities, etc. will remain the same for each month.
• You must ensure the budget is prepared according to the restaurant's Budgeting and Finance Policy provided inAppendix A.
• You should use the template provided below.

Part B - Role Play with Restaurant Owner

Task
You must:
1. Participate in a role-play with the owner (played by your assessor) to discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation.

2. You will have no more than 15 minutes to communicate with the owner in the role-play.

3. Your assessor will also observe you conducting the role play and will record your performance on the Role Play Observation Checklist below. Please review this checklist beforehand so you know exactly what is expected of you.

4. During the role-play you must present the draft budget you have prepared in Part A, and:
• explain how you have allocated funds in
• explain how your draft budget meets the key requirement i.e increase in profit %
• ask for suggestions regarding how to increase the revenue
• ask for suggestions/direction on cost reduction and opinions on reducing staffing.

Part C: Consult with and inform the team about resource decisions.

Task

You must:
1. Participate in a role - play to conduct a meeting with colleagues - including Head Chef and F&B manager about the resource decisions and ask them about new ways to manage the budget, e.g.
• discussions with existing suppliers
• evaluation of staffing and rostering requirements
• sourcing new suppliers
2. Your assessor will organise two volunteers from amongst your classmates to play the roles of the team members.
3. Your assessor will also observe you conducting the role play and will record your performance on the Role Play Observation Checklist below. Please review this checklist beforehand so you know exactly what is expected of you.
4. During the meeting you should:
• inform the team about resource decisions made as part of the budget
• emphasise on the importance of budgetary control
• provide clear direction on the use of resources to remain under budget
• discuss possible ways to reduce costs:
o renegotiate with existing suppliers for lower prices
o longer credit terms
o source new suppliers
• discuss the impact of the revised staffing and rostering budget
• discuss how to overcome shortages, while staying within the budget
• stress the need for keeping detailed records for record keeping and monitoring purposes
• ask for and respond to feedback
• respond appropriately to all the queries presented
• use listening and questioning techniques to clarify understanding
• use correct budget terminology

Assessment 3 - Project and Role Play

It is now October201X (the first month of the secondquarter) is over and it is time to start checking actual income and expenditure against the budget.

The owners have asked you to prepare a brief report on the performance of the first month of the quarter. They have also asked you to investigate appropriate options for more effective management of deviations.

Below is a copy of the actual Profit & Loss (P&L) statement for October 201X.

Part A

1. Compare the actual figures in the table above, against the budget you have prepared the month of October 201X.

2. Calculate at least 3 significant variances between the actual and budgeted figures for October using the Budget Variance Report below.

3. Based on the outcome from the Budget Variance Report, prepare a written report to the owners outlining the favourable and non- favourable aspects, including any reasons for the variance.

4. Include in your report, recommendations for measures to address the budget variance issues, including

• Renegotiating prices and credit terms with existing suppliers
• Sourcing new suppliers

Part B - Role-play

The Owners have approved of your measures to improve the budgetary performance and have asked you to undertake the activities to:
• Renegotiate prices and credit terms with existing suppliers
• Sourcing new suppliers

You have made appointments to meet with one of your best suppliers to renegotiate prices and terms.

You have also asked the F&B Manager of the restaurant to meet you to discuss the sourcing of new suppliers.

You are required to participate in two role play activities simulating the above, to address the budget variance issues you have identified in the Part A.

Your assessor will play the following two roles:
• Role Play 1- Food Supplier
• Sourcing new suppliers - F&B Manager

Your assessor will also observe you conducting the role play and will record your performance on the Role Play Observation Checklist below. Please review this checklist beforehand so you know exactly what is expected of you.

Role Play 1
Participate in a meeting with an existing supplier (played by your assessor), and:

a. Explain the purpose of the meeting
b. Renegotiate for lower fixed prices and longer credit terms
c. Some of the measures you could propose to the supplier are:
• let them know you are shopping around
• offerto buy in bulk from the supplier for lower prices
• offer to accept fewer deliveries of stock, to save money vendor costs
• remind them how beneficial this is for both parties- securing more business for the supplier and saving you money.
d. Use effective communication skills, as given in the role-play checklist below.

Role Play 2
Participate in a meeting with the F&B Manager (played by your assessor), and:

a. Explain the purpose of the meeting
b. Discuss desired budget outcomes with the F&B Manager
c. Provide direction on resource use by sourcing new suppliers
d. Advise them on reducing costs by using measures such as:

• source new suppliers of alcoholic and non-alcoholic beverages
• negotiate better terms with the new suppliers, by:

o letting them know you are shopping around
o offering to buy in bulk from the supplier for lower prices
o offering to accept fewer deliveries of stock, to save money vendor costs
o offer to promote their local wines exclusively

e. offer support to the F&B Manager in implementing these measures to manage the budget and reduce costs

Arrange a time with your Assessor to participate in the role plays tasks.

Part D-Evaluation and report - options for improved budget performance.

The owners are aware of the shortcomings in the budget performance. They have now asked you to undertake appropriate research to investigate new approaches to budget management.

Prepare a comprehensive report outlining the following:

• Propose new approaches to budget management, such as:
o Reducing costs
o Reducing staff or changing rosters
o Reviewing operating procedures

• Define and communicate the benefits and at least one disadvantage of each new approach
• Take account of impacts on customer service levels and colleagues in developing new approaches.
• Explain the importance of monitoring budgets and why you think it will help to manage finances better for the business.
• Present clear and logical recommendations for budget management.