Reference no: EM133015193

SITXFIN003 Manage Finances Within A Budget

Task 1: Knowledge Questions

Objective To understand how to allocate funds according to budget and agreed priorities.
Task Name the points that are discussed/are important to the functioning of budgets:

Task 2

Objective To understand how to allocate funds according to budget and agreed priorities.
Task In essence a budget can be seen as what?

Task 3
Objective To understand how to allocate funds according to budget and agreed priorities.
Task As mentioned in the Learner Guide, large establishments will have several departments involved in the setting of a budget. What therefore, are the three main factors that will determine allocations within the budget? List in detail.

Task 4
Objective To understand how to allocate funds according to budget and agreed priorities.
Task Budget notes assist in what?

Task 5
Objective Know how to discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation.
Task When discussion on changes to appropriate income and expenditure items needs to occur, who might the appropriate colleagues be that are involved? Name 6 of them.

Task 6
Objective Know how to discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation.
Task Operational parameters are usually set to determine acceptable trading figures. Warning bells should ring when figures are outside of these parameters. What are the usual guidelines for investigation?

Task 7
Objective Know how to discuss changes to income and expenditure priorities with appropriate colleagues prior to implementation.
Task Experience has demonstrated that changes in income and expenditure may be needed because... Name 5 points in detail:

Task 8
Objective Learn how to consult with and inform all relevant personnel about resource decisions.
Task It is common knowledge that we need to consult with and inform relevant personnel and departments. Who are the 5 main departments/people that we need to meet with?

Task 9
Objective Learn how to consult with and inform all relevant personnel about resource decisions.
Task As budgets and budget control are important issues there are accepted ways to inform those concerned with the budget allocations. Name the 4 ways that are considered acceptable.

Task 10
Objective Know how to promote awareness of the importance of budget control.
Task When discussing the importance of budgets in general terms - as opposed to the specifics of a nominated budget - you may elect to explain that budgets are only a guide to what is expected to happen but that they nevertheless reflect the objectives and goals of the business, and that they... Name the 4 points:

Task 11
Objective Know how to promote awareness of the importance of budget control.
Task There are a number of types of budgets that you may be required to explain to others. Name 7 of them:

Task 12
Objective Understand how to maintain detailed records of resource allocation according to organizational control systems.
Task Income records that need to be kept may include what? Name 6:

Task 13
Objective Understand how to maintain detailed records of resource allocation according to organisational control systems.
Task Expense records that may need to be kept may include what? Name 5:

Task 14
Objective Learn how to use financial records to regularly check actual income and expenditure against budgets.
Task What is the purpose of checking actual income against budget figures? Name at least 6 and explain in detail:

Task 15
Objective Know why to include financial commitments in all documentation to ensure accurate monitoring.
Task Accurate monitoring of documentation involves what? Name the 4 points:

Task 16
Objective Know why to include financial commitments in all documentation to ensure accurate monitoring.
Task What should you do when passing on the income from your department, to ensure the correctness of the entries that have been made:

Task 17
Objective Know how to identify and report deviations according to significance of deviation.
Task What should you do if the figures/budgets do not agree with your records?

Task 18
Objective Know how to identify and report deviations according to significance of deviation.
Task If you are not achieving the budget figures that were set down for your department/section, what should you do?

Task 19
Objective Know how to investigate appropriate options for more effective management of deviations.
Task When looking at budgets, what are the 4 things that we need to remember?

Task 20
Objective Know how to investigate appropriate options for more effective management of deviations.
Task What is meant by the term "management by exception"? Explain in detail:

Task 21
Objective Know how to advise appropriate colleagues of budget status in relation to targets.
Task What are the five groups that need to be advised if problems/major variances are noted in the budget figures?

Task 22
Objective Know how to advise appropriate colleagues of budget status in relation to targets.
Task What are the ways colleagues can be advised of the status of the budgets?

Task 23
Objective Understand how to assess existing costs and resources and proactively identify areas for improvement.
Task What are some of the reasons that would account for reduced returns? Name at least 6:

Task 24
Objective Understand how to assess existing costs and resources and proactively identify areas for improvement.
Task Effective control of revenue and costs requires an integrated approach. Explain:

Task 25
Objective Understand how to assess existing costs and resources and proactively identify areas for improvement.
Task A total control cycle involves 7 integrated elements. List and explain in detail:

Task 26
Objective Know why to discuss desired budget outcomes with relevant colleagues.
Task In relation to budget performance, only 3 possibilities exist. Name them and explain each point in detail:

Task 27
Objective Learn how to undertake appropriate research to investigate new approaches to budget management.
Task Where problems are identified in terms of the budget it may be necessary to undertake appropriate research. What form could this research take?

Task 28
Objective Learn how to undertake appropriate research to investigate new approaches to budget management.
Task Additional research may be carried out in other areas. Name at least 6 of them:

Task 29
Objective Know why to take account of impacts on customer service levels and colleagues in developing new approaches.
Task Any changes - regardless of how small they may appear - will have repercussions. Name the 3 probabilities:

Task 30
Objective Know why to take account of impacts on customer service levels and colleagues in developing new approaches.
Task Change may be planned or unplanned. Explain what you think this comment could mean in your own words, in detail:

Task 31
Objective Know how to present clear and logical recommendations for budget management.
Task Recommendations may need to be presented to various people or departments. It is essential that this is done clearly, logically and in a timely fashion. Your recommendations should address what points? Name at least 6 and explain:

Task 32
Objective Understand how to complete financial and statistical reports within designated timelines.
Task Using financial and statistical reports involves what?

Task 33
Objective Understand how to complete financial and statistical reports within designated timelines.
Task What basic components should all reports contain? Name at least 6:

Task 34
Objective Understand how to complete financial and statistical reports within designated timelines.
Task Name at least 8 types of reports that may be produced:

Task 35
Objective Know how to prepare and present clear and concise information to enable informed decision making.
Task Name 4 sources of information that could be used in reports:

Task 36
Objective Know how to allocate budget resources and Consult with and inform all relevant personnel about resource decisions.
Task Access the link below to see the budgeted P&L of Jet Airways (India).

Analysis the information above and imagine the process of creating the above budget and answer the following questions in a word document.

a) What is the normal budgeting period for Jet Airways India?
b) List three (3) ways for Jet Airways India to inform staff about their respective budget allocations.
c) List the title of employees who are involved in the discussion process of setting income and expenditure priorities for the above budget.
d) Why will Jet Airways India collect, fill and maintain accurate financial/ resource allocation records?
e) List various financial reports that would have helped Jet Airways India in creation of above budget.
f) Why would Jet Airways India provide relevant colleagues with adequate notice of the opportunity to contribute to the above budget planning process?
g) List three (3) external groups of people that might have been consulted by Jet Airways India in the above budget preparation.
h) What are the limitations of the above budget?
i) Why would it be a good idea for Jet Airways India to draw up a draft budget before finalizing it?
j) Why might it be important to Jet Airways India to utilise specific formats for the presentation of the above budget?

Task 37
Objective Learn how to financial and statistical reports & make recommendations
Task Assume that you work for a travel agency. The owner of the store, David Beckham, has asked you to prepare a cash budget for the month of October. After examining the records of the business, you will find the following:

1. Cash balance on October 1 is $1,980.
2. Actual sales for August and September are as follows:
August September
Cash sales $15,000 $20,000
Credit sales $80,000 $90,000
Total Sales $95,000 $110,000

3. Credit sales are collected over a 3 month period: 50% in the month of sale, 30% in the second month and 15% in the third month. The remaining sales are uncollectible.
4. Payments to airlines average 70% of month's sales. Of those 40% are paid in the month of sale. The remaining 60% are paid in the following month.
5. Salaries and wages total $2,000 per month.
6. Rent is $2,700 per month.
7. Taxes to be paid in October are $5000.
8. David Beckham usually withdraws $4000 each month from the business for his own expenses.
9. Advertising is $500 per month.
10. Other operating expenses total $800 per month.

The owner tells you that he expects cash sales of $10,000 and credit sales of $65,000 for October. He likes to have $2000 on hand at the end of the month and is concerned about potential October ending balance.

Required:
a) Prepare a Cash Budget for October.

b) Which individuals in an organization will you transfer the above draft budget for comments?

c) Did the business meet Beckham's desired ending cash balance for October?

d) Assuming that the owner has no hope of establishing a line of credit for the business, what recommendation would you give the owner for meeting the desired cash balance?

Task 38
Objective Understand how to monitor financial activities against budget and Identify and report deviations according to significance of deviation.
Task a) What financial commitments can you include in all documentations to ensure accurate monitoring?

b) What are Unacceptable deviations and how are they reported to department managers?

c) List three (3) reasons why figures in actual budget might be wrong.

d) Describe how you will advise colleagues of budget status and related targets?

e) List the different types of variances used in Variance analysis report.

Task 2: Case Study

You are required to do the following.

• Complete Tasks 1, 2 in Case Study 1.
• Read the scenarios and answer the questions.
• Round all dollar values to the nearest whole number when calculating financial information; for example, $12.55 becomes $13, $18.22 becomes $18.
• Round all percentages to one decimal point when calculating financial information; for example, 12.55% becomes $12.6%, 18.22% becomes 18.2%.
• All budget calculations can be completed manually, using accounting software or computer-based spreadsheet software, such as Microsoft Excel or Google Sheets.

Case study 1
The Jackson hotel has a bistro, two bars (public and sports), a drive-through and walk-in bottle shop and TAB situated beside the sports bar.

You are the manager of JJ's Bistro. It seats 210 people and is open for lunch and dinner, seven days a week. The hotel promotes a family environment and has a playroom for younger children and an activity centre for pre-teens containing electronic and other games. These glass walled areas are within view of customers seated in the rear section of the bistro.
The hotel's management team develop an operational budget for the business based on previous budgets, anticipated business and any special projects, such as renovations or new products. Each operational area within the hotel is given a departmental budget based on organisational goals and their anticipated revenue and expenses.
Budgets are developed on a quarterly basis. Each department has quarterly and monthly budget targets. Monthly budgets can be adjusted during a quarterly cycle if circumstances within the department change.
The following events have taken place during the April budget period.

• Prices for meat, fruit and vegetables have increased as a result of recent drought in some regions and floods or storms in others.
• Prices for many wines have fallen due to a surplus in the market.
• Beer prices have risen slightly, again due to the drought leading to shortages of ingredients and an increase in government taxes.
• A major wine supplier has been running an in-house promotional campaign, with staff product knowledge training provided to help increase sales.
• The bistro menu changes to the new winter menu on May 1st. Its introduction is being promoted in April throughout the hotel.

Task 1: Calculate variances
• Complete the comparative analysis report for the Bistro departmental budget - April by calculating all missing dollar value and percentage variances. (Blue spaces only)
• Complete the Favourable/Unfavourable column by indicating if the budget results are favourable (F) or unfavourable (UF) for the business. (Blue spaces only)
Task 2: Question and answer
• Answer all questions based on the budget outcomes in the completed April budget comparative report in Task 2 and case study information.

Q1: Are there any significant variances in the sales figures that you should be concerned about? Explain what the results indicate and why you are/are not concerned about them.
Q2: Are there significant variances in any of the expenses categories that you think should be investigated further? If yes, discuss which categories and why you think they need investigation. If no, discuss why the deviations do not warrant investigation.
Q3: Based on your responses to questions 1 and 2, what is your overall evaluation of the budget results? Is the bistro meeting its financial targets?
Response should indicate an ability to interpret budget and variance outcomes and apply the results to the workplace.
Response could include the following.
Q4: Which expense category has the most funds allocated to it? Explain why it is important you manage costs in this category carefully.
Q5: Using the results and information obtained from the April comparative report, your answers to the previous questions and the background information, write a transcript of the outcomes of your report ready to deliver to the bistro staff at the next team meeting. The transcript should include the following information.
• The current status of the budget; is the work area meeting its budget targets, is it on track to meet June quarter budget targets?
• Which areas are underperforming or performing better than expected?
• What changes, if any, need to be made to help the team meet next month's budget targets?
• An outline of budget targets for May.
• Organisational factors that contributed to the setting of these targets.

Case study 2
It is the end of the June financial quarter and all departments in the Jackson's hotel are preparing financial and statistical reports.
Task 1: Prepare a profit and loss statement
• Please check Bistro profit and loss statement
• Complete the Bistro profit and loss statement - June quarter by calculating all missing dollar value and percentage variances. (Blue space only)

Task 2: Prepare a statistical report
• Complete the Trend analysis report - June quarter using the information provided above

Task 3: Question and answer
Q1: The following factors must be considered when preparing financial and statistical reports. Select three factors that are relevant
Factors for consideration in the preparation of financial and statistical reports.
• Performance of department, project and/or products and services
• Daily, weekly and monthly transactions
• Variances in income and/or expenditure
• Sales performance
• Sales returns
• Staff costs
• Cash flow
• Covers and financial return
• Expenditure
• Income
• Occupancy rates and financial return
• Stock levels
• Wastage
• Yield

Attachment:- Manage Finances Within A Budget.rar