Basic management and bookeeping questions/SITXFIN402 Manage Finances within a Budget
Basic management and bookeeping questions/SITXFIN402 Manage Finances within a Budget
Projects
Learning Outline
Within this resource, you will be covering the following key topics:
• Interpret and manage multiple budgets.
• Allocate budget resources.
• Monitor financial activities against budget.
• Identify and evaluate options for improved budget performance.
• Complete financial and statistical reports.
• Use correct budget terminology.
Using these key topics as a guide, you will work with your trainer/assessor to develop your skills and knowledge. The role of your trainer/assessor is to assist and
guide you through your learning journey to achieve your goals.
Assessment Guidelines
To successfully complete this unit you will be required to complete the following:
• True/False questions
• Multiple choice questions
• Short answer written questions
• Projects
As part of this written assessment you will need to access the following resources to support you in this assessment:
• E-Coach learning content
• Computer with internet access and word
By completing this assessment online, it will form the evidence required to support your skills and knowledge to be deemed competent in this unit.
• Complete all assessment tasks within this document, save and upload.
• If you need to provide supporting documentation please ensure it is in Microsoft Office compatible document or a PDF.
Project 1
You work as a regional manager for a small travel agent, Happy Holidays who operate three stores.
Recently, the budget was prepared for the upcoming financial year by the owner and the accountant.
You and two of the store managers were also able to provide valuable input to each store’s budget. Unfortunately, the manager of Store 1 was not able to participate
due to being on leave at the time.
The budget has now been finalised (see over the page).
The owner and accountant feel that the anticipated net profit for each store should fall within the range of 10-15% of total budgeted revenue.
Review the budget (over the page) and complete the following questions and tasks:
a) Starting with Store 1, write a brief memo to the manager advising that the budget has been finalised. Include in your memo the desired budget outcomes for the
store, as well as the importance of budget control for all employees and the importance of keeping detailed records of how money is spent throughout the year on
resources.
All managers have now been advised that the budget has been finalised and have each received a copy of the budget.
b) You have received the following questions from the store managers regarding the annual budget (assuming that peak / non-peak periods are not being taken into
account at this stage). Show your calculations for each query:
i) What is the total monthly sales budget for Store 1?
ii) How much has been allocated each quarter for training and seminars for Store 1?
iii) How much has been allocated for each month for advertising & promotions for Store 2?
iv) How much has been allocated for monthly commissions (payable to employees) for Store 3?
Happy Holidays – Annual Profit & Loss Budget
for 1st July xx to 30th June xx
Details Store 1 Store 2 Store 3 Total
Revenue
Airline Commission 150,000 100,000 75,000 325,000
Hotel Commission 150,000 100,000 75,000 325,000
Other Commission 100,000 50,000 37,500 187,500
Total Revenue 400,000 250,000 187,500 837,500
Operating Expenses
Accounting Fees 2,500 1,500 1,000 5,000
Advertising & Promotions 15,000 15,000 10,000 40,000
Bank Charges 1,200 720 480 2,400
Rent 25,000 15,000 9,600 49,600
Telephones 12,000 7,200 4,800 24,000
Training and Seminars 10,000 6,000 4,000 20,000
Wages – Base Salary 160,000 120,000 90,000 370,000
Wages – Commissions 60,000 37,500 28,125 125,625
Superannuation 20,350 14,570 10,927 45,847
Total Operating Expenses 306,050 217,490 158,932 682,472
NET PROFIT OR LOSS 93,950 32,510 28,568 155,028
% of Budgeted Revenue 23.49% 13.00% 15.24% 18.51%
Store 1 is the biggest out of the three stores with a full-time manager (paid a $50K base salary plus commission), two full-time sales consultants (paid a $40K base
plus commission) and one part-time sales consultant (paid a $30K base plus commission).
Store 2 has a full-time manager (paid $50K as above), one full-time sales consultant (paid $40K as above) and one part-time sales consultant (paid $30K as above).
Store 3 has a full-time manager (paid $50K as above) and one full-time sales consultant (paid $40K as above).
i) According to the Budget P&L on the previous page, has enough been allocated for base salaries for all staff? (Show your calculations for each store)
Project 2
July (the first month of the financial year) is over and it is time to start checking actual income and expenditure against the budget.
You are ready to check Store 3.
Below is a copy Store 3’s bank statement for July.
Review the bank statement and complete the tasks over the page
Happy Holidays – Store 3
Bank Statement – July xx
Date Details Deposit Withdrawal Balance
1/7/xx Balance Bought Forward 22,135.00
Account Fee 40.00 22,095.00
Direct Debit: Monthly Rent* 880.00 21,215.00
5/7/xx BPAY: Telephones* 550.00 20,665.00
10/7/xx Newspaper Advertising* 1,100.00 19,565.00
15/7/xx Monthly Net Wages** 6,000.00 13,565.00
25/7/xx BAS: April-June quarter 2,228.00 11,337.00
30/7/xx Airline Commission* 7,865.00 19,202.00
Hotel Commission* 5,500.00 24,702.00
Cruise Commission* 1,650.00 26,352.00
Car Rental Commission* 1,100.00 27,452.00
*These expenses include GST however ex-GST figures are report on P&L.
** Wages: $7,500 Gross less <1,500> PAYG = $6,000 Net
a) Using the annual budget from Project 1, calculate the monthly budget figures for expenses for Store 3 into the table below (at this stage, peak and non-peak
periods have not been taken into account). Do not include cents.
b) Using the bank statement on the previous page, calculate the actual expense figures for Store 3 for July (remember to not include GST).
c) Calculate any variances (if any) between the actual and budgeted figures for July.
Operating Expenses Actual Budget Variance $ Variance %
Accounting Fees
Advertising & Promotions
Bank Charges
Rent
Telephones
Training and Seminars
Wages – Base Salary
Wages – Commissions
Superannuation
Other
Total
d) What reason could you provide for having nil accounting and training and seminar expenses for the month of July?
e) Are there any withdrawals or deposits on the bank statement that do not get reported on the P&L? If yes, explain why the transaction/s are not reported on the
P&L.
Project 3
You have been asked to prepare a cash flow forecast for the next three months (August, September and October) for Store 3 using the following anticipated transactions:
• Accountant’s bill is due in August – Store 3’s invoice is $1,100 (inc. GST). Do not account for any accounting fees in September or October.
• Advertising costs – $750 per month (inc. GST).
• Bank charges – $40 per month (GST Free).
• Rent costs – $880 per month (inc. GST).
• Telephone costs – $440 per month (inc. GST).
• Training and Seminars – all Store 3 staff are attending a training seminar in September costing the business $2,200 (inc. GST). Do not account for and
training and seminar costs for August or October.
• Wages – Base Salary – $7,500 gross per month.
• Wages – Commissions: $2,343.75 gross per month.
• Superannuation – paid quarterly and will be paid in October for an estimated amount of $2,731.75. Do not account for any super in August or September.
• BAS – paid quarterly and will be paid in October for an estimated amount of 6,850.00. Do not account for BAS in August or September.
a) Using the table on the next page, as well as the above expenses, calculate a cash flow forecast for the next three months. You must include GST in your
figures as the GST inclusive price comes into and out of your bank account.
Happy Holidays – Cash Flow Forecast
Details August September October
Balance Bought Forward: 27,452.00
Plus anticipated sales: 17,187.50 17,187.50 17,187.50
Less anticipated expenses:
Accounting Fees
Advertising
Bank Charges
Rent
Telephones
Training and Seminars
Wages – Base Salary
Wages – Commissions
Superannuation
BAS
Anticipated Bank Balance:
Project 4
It is now October and the first quarter of the financial year is over (being July to September). The accountant has prepared an actual P&L for this quarter for each
store compared to budget. Variances have already been calculated.
Some concerns have been raised about Store 1 going over their advertising and marketing budget, as well as their sales commission being significantly lower than
anticipated
These issues were bought to the attention of Store 1’s manager who firstly advised the following facts:
• The % of the total sales target for each store is as follows:
Store 1 – 47.76%
Store 2 – 29.85%
Store 3 – 22.39%
• The % of the total advertising and marketing budget for each store is as follows:
Store 1 – 37.5%
Store 2 – 37.5%
Store 3 – 25%
• The owner and accountant feel that the anticipated net profit for each store should be between 10-15% of total budgeted revenue; the anticipated net profit for
Store 1 is much higher at 23.49%
Store 1’s manager raised the following concerns based off the above statistics:
• Regarding the advertising and marketing budget, Store 1 feel that they should be entitled to a minimum of 47% of the advertising and marketing budget, based on
having the highest sales target to achieve of nearly 50% of the total sales budget. (At present, Store 1 has the same advertising and marketing budget as store 2, who
has a much lower sales target of just under 30%).
• Regarding the sales target falling short, the store manager feels that they either need an additional full-time consultant to meet their high sales target, or
that their sales target needs to be reviewed.
In light of the above suggestions, you have decided to calculate how the above changes would impact on the budget.
Using the Adjusted P&L Budget below, manually adjust the following figures:
a) Advertising and Promotions: 50% to Store 1, 30% to Store 2 and 20% to store 3.
b) Wages: add an additional $40K to Wages – Base Salary for Store 1 as well as an additional 9.25% (of $40K) to Superannuation for store 1.
c) Recalculate the total operating expenses for each store, as well as net profit or loss and % of budgeted revenue.
Happy Holidays – Adjusted Profit & Loss Budget
for 1st July xx to 30th June xx
Details Store 1 Store 2 Store 3 Total
Revenue
Airline Commission 150,000 100,000 75,000 325,000
Hotel Commission 150,000 100,000 75,000 325,000
Other Commission 100,000 50,000 37,500 187,500
Total Revenue 400,000 250,000 187,500 837,500
Operating Expenses
Accounting Fees 2,500 1,500 1,000 5,000
Advertising 40,000
Bank Charges 1,200 720 480 2,400
Rent 25,000 15,000 9,600 49,600
Telephones 12,000 7,200 4,800 24,000
Training and Seminars 10,000 6,000 4,000 20,000
Wages – Base Salary 120,000 90,000
Wages – Commissions 60,000 37,500 28,125 125,625
Superannuation 14,570 10,927
Total Operating Expenses
NET PROFIT OR LOSS
% of Budgeted Revenue
d) Write an email to the accountant explaining the proposed suggestions from the manager of Store 1, as well as how the changes will impact the net profit or loss
for each store, and the overall business. Include whether the changes, in your opinion, would impact on service levels for the store.
e) Write an email to the manager of Store 2 advising them of the proposed changes to their advertising budget, and why this change is taking place.
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Want to achieve a satisfactory grade on your first go?
Then try these formulas + hints and tips as you go!
To demonstrate positive or negative figures.
To display a figure as positive use 100 To display a figure as negative use (100)
To calculate positive or negative variances –
If the Actual is GREATER than the Budget, the variance will be positive (as the result is more than expected or budgeted) If the Actual is LOWER than the Budget,
the variance will be negative (as the result is less than expected or budgeted)
To calculate the Net Profit or Loss
Total Revenue minus Total Operating Expenses
To calculate the Percentage of Budgeted Revenue
Net Profit or Loss divided by Total Revenue multiplied by 100
To calculate the Variance Percentage (%)
Variance $ Amount divided by Budget Amount then multiplied by 100
GST Calculations
To remove GST: $ Amount divided by 1.1 OR To calculate GST: $ Amount multiplied by 9.09% = GST amount
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Check you’ve included the following for your MANAGE FINANCES WITHIN A BUDGET – PROJECT 1.
Include a memo to the manager with requested information (include both dollar amounts and percentages). Ensure you show your calculations as well as the answer
Spelling and grammar has been checked.
Check you’ve included the following for your MANAGE FINANCES WITHIN A BUDGET – PROJECT 2.
You have not included GST in your calculations where indicated (GST is calculated at 9.09%). Ensure there is a numerical value in each box even if the answer is a
0. You have indicated whether a figure is a positive or negative. Keep in mind that a Bank Charge can also be called an Account Fee (this is different to an
Accounting Fee). Spelling and grammar has been checked.
Check you’ve included the following for your MANAGE FINANCES WITHIN A BUDGET – PROJECT 3.
You have double checked the anticipated transactions to understand what is required of you. You have included the GST in the Cash Flow Forecast. Ensure there is
a numerical value in each box even if the answer is a 0. Double check your calculations.
Check you’ve included the following for your MANAGE FINANCES WITHIN A BUDGET – PROJECT 4.
Double check your calculations. Include an email to the accountant with the requested information (include both dollar amounts and percentages). Include an email
to the manager with the requested information (include both dollar amounts and percentages). Spelling and grammar has been checked.
All done? Submit!
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