Reference no: EM132647681

Unit 02 Business Resources - BTEC Level 3 Extended Diploma in Business

Assignment - Budgeting and Forecasting

The main purpose of this assignment is to:

Analyze the importance of budgeting and control of expenses in an organization

Scenario
You are working as a Financial consultant working for Fitzgerald Ltd, a company run by Mr. Fitz, a published author and a lecturer in the small town of Stars hollow. The company's main operations are sale of books published by Mr. Fitz. In order to facilitate the sale of books, he opened a small café with a separate area for a bookshop/ library and it has its own pastry chef, Aria who is also the manager of the café + bookshop. Recently, due to the high demand for café food, he was asked to cater many events that took place in the town. To manage and operate the catering subsidiary of the company he has hired 3 other staff members.
Since Mr. Fitz was occupied with lecturing and focusing himself on publishing his new book, he was unable to look into the operations of his business. Due to this, the company has run into many liquidity issues and he seeks your assistance to overcome these problems.

Task 1

Provide a brief report demonstrating the use of budgets as a way of having control over the income and expenditure of the business. The appendices 1 and 2 of this brief gives you information about the company. Based on this you are required to;
• Briefly explain the types of costs in an organization (fixed cost and Variable cost)
• Using appendix 1, calculate the break-even point, margin of safety if they achieve the targeted profit for the given scenarios and draw the respective charts.
• Identify problems associated with the given budget of the organization given in the appendix 2, and other problems associated with preparation and managing the budget
(research on problems when preparing and managing budgets )
• Suggest solutions to overcome the aforementioned issues. ( research on solutions for the founded problems
• define budgets, different types of budgets and uses of budgets
• Explain type of costs ( fc and variable

Task 2
Using Appendix 2 of this brief, analyze the issues related to uncontrolled expenses of the organization. In this you are required to;
• Identify variances from the budgeted to actual figures ( calculate the differences budgeted and actual, income and expense
• Identify reasons for these variances ( reasons for income and expenses to increase or decrease )
• Identify what problems it can create to the company ( research on problems of overspending )

Task 3
Based on the above findings of task 2 and your knowledge, prepare a report to the CFO of the company evaluating the consequences of unmonitored costs. You are required to clearly identify short term and long term issues that can arise by not keeping track of expenses and how it can impact the organization.

Attachment:- Budgeting and Forecasting.rar