Reference no: EM132821069

SITXFIN004 Prepare and Monitor Budgets -

Purpose of Assessment

To evaluate the candidate's ability to demonstrate the performance outcomes, skills and knowledge required to all tourism, travel, hospitality and event sectors. The budget may be for an entire organisation, for a department or for a particular project or activity Assessments is the process of gathering and judging evidence in order to decide whether have achieved a standard or objective and it is a competency based assessment. The competency- based assessment is the method of gathering and judging of evidence in order to decide whether you achieved a standard of competency.

Assessment Task 1
Q1. List six items you would expect to find in a capital budget for a hospitality business?
Q2. List six different income sources you would find in a hospitality business.
Q3. Briefly explain the following budget methods?
Q4. Indicate whether the following statements in regard to budgets are true or false?
A budget is a financial document which anticipates the future earnings and expenditure of a business.
Involving staff in the budgeting process means they will work harder to achieve the
budget than they would if it were just handed down by management.
Budget targets are set and these are analysed against actual results during a given period
Budgets must be compiled by a chartered accountant
Budgets are nominated for a financial year and then budget into quarters and monthly figures
To make the budget relevant, budgets are broken down further into revenue and expense categories.

Q5. Indicate whether the following statements in regards to business budgets are true or false?
Budgets may contain sales revenue. Cost of goods Sold (COGS). Wages, rent electricity and other components
Capital expenditure budgets must include superannuation, payroll tax. Etc.
Budgets can be managed through accountancy software programs such as Xero, MYOB.
Larger budget incorporates only the revenue generating departments of a business
Master budget incorporates only the revenue generating departments of a business
Upcoming projects must be budgeted for to ensure the project is viable

Q6. Indicate whether the following statements in regards to budgets are true or false?
Management restructures are internal factors that do not impact on budget
Human resource requirements will impact on budgets as each new staff member
required will add additional expenditure to the budget.
Projects will impact on budget and depending on size may best be assessed in a separate budget.
External factors are outside the control of the business. Typical examples are legislation and regulation
Variances to budget must be checked regularly so that corrective measures can be put in place.
Changes in commodity or service prices have no impact on budgets
Budgets may need to be adjusted when there are changes to suppliers and associated prices

Q7. From the following information prepare a sales budget for A2Z Restaurant for the month of March 2021. A2Z showing monthly sales in units and value by dish items. The A2Z restaurant sales for Feb 2021 wer:

Item	Unit	Value ($)
Sandwiches - Item A	1000	20,000
Drinks - Item B	2000	30,000
Lunch package - Item C	3000	75,000

In March 2021, the unit sales of A and B will increase by 15% and 10% respectively but those at C will decrease by 5% due to COVID19. The selling price of A and B will remain the same but that of C will increase by 10%.

Q8. List 6 sources of data for compiling a budget

Q9. Indicate if the following statements relating to the budgeting process are true or false.
The process of preparing a draft usually involves entering all the projected income, expenses, purchases, staffing requirements, etc. into a spreadsheet or accounting program

The budgeting process requires strong negotiating skills
It is important to convince staff of the achievability of the budget
Involving staff in the budgeting process can be costly time-wasting process
If staff are positive about the budget, they are more likely to support it and do their best
to work towards the targets that have been set.

Q10. Indicate whether the following statements in regard to monitoring budget are true or false Monthly reviews of the budget against actuals is an important tool of budget management

In most business/industries the budget is completed by the end of the financial year, for the next financial year

Every revenue and expense item on the profit and loss statement for every department should be compared to the budgeted figure
It is important to undertake further investigation into budget variances, whether they are over or under
Budget variances and impacts should be reviewed at the end of the financial year.
Managers should include budget variances as well as an overall picture of the running of the department in their monthly report

Q11. Calculate the profit or loss given the following revenue and expenses:

Item	$	Revenue	Expenses
Sales	50,000	50000
Purchases	24,000		24000
Salaries	12,000		12000
Rent	1,800		1800
Electricity	300		300
Telephone	450		450
Advertising	800		800	Profit	Loss
Totals				10650

Q12. What's meant by being "over" or "under" budget? What type would represent a favourable
variance?

Q13. Indicate whether the following statements in regard to analysing budgets are true or false?

Wages can often vary form budget
The only way to meet budget targets and savings is to cut expenditure
Raising revenue will affect budget in a negative sense as expenditure will increase more than the amount of revenue
Net profit is impacted negatively by an increase in revenue
Raising average spend by up-selling is an effective way to increase profitability
If the projected sales figures are $200,000 and the actual sales figure is $240,000 this represents a favourable variances of 20%
If the projected sales figures are $150,000 and there is a favourable variances of 10% the actual sales figures are $165,000

Q14. In order to have a budget change approved. You must prepare a report. List 5 details that must be included in the report.
Q15. What action could you take to rectify the situation and return sales back to budget forecast?
Q16. What action could you take to rectify the situation and return sales back to budget forecast?
Q17. Define the following accounting and hospitality terms?
Q18. If you are developing a budget for a large restaurant, who would need to be consulted during the development and draft process?
Q19. What are four advantages of consulting others during the budgeting
Q20. Negotiation with material suppliers has meant that 25% of raw material purchases are unpaid at
the end of each month. Other expenses including wages and salaries are promptly paid in the month they are incurred. Any unpaid balances in a month are settled in the following month.

	Raw material Purchase $	Salaries and Wages $	Other expenses $
Feb 2021	80,000	40,000	31,000
March 2021	100,000	45,000	32,000

From the above information, the payment section of the cash budget for the month of March will show a total payment of: (Tick the correct answer)
a. $177,000
b. $157,000
c. $172,000
d. $171,000

Assessment Task 2 - Case Study

Scenario

Below are the 2020 budgeted and actual cash flow figures from the A2Z Catering. Look at the Income variance statement after 3 months of business in their new catering services. Analyze the Variances and recommend what corrective measures would you put in place to help control these variances in the future?
Budget Variance Reports

1. What is this report telling you?
2. What are the five corrective actions required to undertake to ensure budgetary control?
3. What strategies would you recommend for the next three months?

Case Study 2:
Scenario:
Read the following Contingency plan developed by Finance manager for A2Z Catering Pty Ltd. Your task is to analyse the strategies that have been developed to mitigate the risk and answer the questions below.

1. Has Eden identified all strategies to mitigate the identified risk? Justify your response.
2. Has Eden correctly identified the correct people to consult in the development of the strategies? Justify your response.
3. Are the timelines that Eden has created achievable? Justify your response.

Assessment Task 3 - Project Task 1
Q1. Use a 4 % incrementing budgeting system to develop a budget for 2018/ 19 for the following budget items in the next 4 parts of question 1.
1. 2019/20 Food $ sales dining room. (Show the figures and your calculations).
2. Food purchases $ figure. (Show the figures and your calculations)
3. Alcohol beverage purchases $ figure. (Show the figures and your calculations).
4. Rent, $ figure. (Show calculations)

Task 2

Q1. If A2Z catering services pty ltd. plans to add a additional barista and replace the existing micro- wave with new one in January, the capital expenditure budget would be complied as follows.

Prepare a capital expenditure statement for the month of Jan 20XX. The cost of micro-wave = $20,000. Barista total cost including machine = 45,000.

Q2: The A2Z catering services sells for both cash and credit. On average, the receipts form credit customers amount to 40% of the sales in the month of sale and 60% in the following month. The budgeted credit sales (excluding GST) for Jan 20XX and Feb 20XX are as follows:

Prepare the statement

Q3. Prepare a cash flow plan for the A2Z catering services from the following information: Cash Sales = $600,000
Collection from accounts receivables = $1,386,000 Payments to creditors = $470,000
GST payable to ATO = $130,000 Salaries and wages = $502,000 Interest payments = $213,000
Other operating expenses paid = $108,000 Loans repaid during period = $780,000 Capital expenditure = $65,000
Operating cash balance = $132,000
Note: All purchases are paid for in the month following the month of purchases.

Q4. A small catering services operating on a cash basis has the following for the forthcoming year ending 30 June 20XX.
Budgeted Sales $10,000
Cash operating expenses = $6,000
Non - cash operating expenses = $1000 Questions:
Prepare a budgeted income statement and a cash flow plan.
Reconcile the budgeted net profit with the surplus cash revealed by the cash budget. Assume that the opening cash balance was $5000

Q5. The balance sheet of A2Z catering services a small business, as at 30 June 20X0 was as follows:

Balance Sheet as at 30 June 20X0
	$	$
Current assets (including $10,000 inventory and cash $30,000)		40,000
Non - current assets		79,000
Total current assets		119,200
Current liabilities	18,560
Non - current liabilities	11,840	30,400
Net Assets		88,800
Represented By:
Owner Equity		88,000

Ignoring depreciation, prepare the following budgets and plans for 20X1 on the assumptions give:
1. Sales Budget
2. Purchases budget
3. Inventory budget
4. Cost of goods sold budget
5. Operating expenses budget
6. Cash flow plan
7. Budgeted income statement for 20X1/X2
8. Budgeted balance sheet for 20X1/X2

Attachment:- Prepare and Monitor Budgets.rar

Note:Need a answer of Task 2 Question 2