Reference no: EM13839285

SECTION 1: ALLOCATE BUDGET RESOURCES

Activity 1

1 Why is it necessary for organisations to collect, file and maintain accurate financial records?

2 Why would a sole proprietor/ partnership need to prepare a budget, and what type of budget would be needed?

3 Joe Bloggs Pty Ltd has just gained a major contract, which will generate additional income over a 2 year period, but will also require extra resources. At the same time, however, they are planning to expand into website sales. What type of budget/s would they need to prepare, and why? What methods could they use to fund the website expansion?

4 When setting budgets it is a good idea to make contingency plans. What are contingency plans and why are they necessary?

Activity 2

1 You are a sales manager for a large hospitality operation, and required to review and provide feedback via email on the budget document. What process would you follow, and what are some of the questions you would ask in order to provide valuable feedback?

2 Explain and discuss the things that might be taken into consideration when prioritising income and expenditure requirements for a budget.

Activity 3

1 Why should employees be involved in setting and monitoring the budget?

2 Budgets are used to allocate resources for work. What are some of the resources that might be required in a hospitality operation? List at least 8 different resources that might be allocated via the budget.

3 In what ways might information relating to budgets and resource allocations be communicated to staff?

Activity 4

What is the importance of collecting, filing and maintaining accurate financial/ resource allocation records?

SECTION 2: MONITOR FINANCIAL ACTIVITIES AGAINST BUDGET

Activity 5

Why is it necessary to regularly check actual income and expenditure against budgets at regular intervals?

Activity 6

1 Classify the following into indirect or direct costs to a business, and advise whether they are fixed or variable costs:
Cost Fixed or variable? Direct or indirect?

stock

loan payments

equipment (leased)

transport costs

packaging

wages (hourly)

wages (salary)

petrol

marketing

stationery

worker's compensation

2 Why is it necessary to document and record financial commitments?

Activity 7

1 Explain the difference between a sales volume variance and a sales price variance.

2 What is a materiality threshold, and how might the level set for negative deviations differ between small and large business?

Activity 8

Which stakeholders might need to be informed of budget variances and why might they need to be informed?

SECTION 3: IDENTIFY AND EVALUATE OPTIONS FOR IMPROVED BUDGET PERFORMANCE

Activity 9

1 Explain why you think it is necessary to constantly look for ways to improve cost management?

2 What existing information might need to be reviewed, analysed and improved?

Activity 10

1 Imagine you are a small retail food shop owner. Up until now you have been doing your budgets manually on a home-made spreadsheet. However, you have ascertained from your research that you need to become more up-to-date in your budgeting, as costs in some areas have blown out significantly this budget period. As usual, time and money are short. What options could you consider?

2 Why might organisations change their budgeting procedures?

Activity 11

1 In what situations would implications of a budget be demotivating to staff?

2 Why is it so important to take customer service requirements into account when designing and bringing down a budget?

Activity 12

What sort of evidence might you need to provide if you make budget recommendations?

SECTION 4: COMPLETE FINANCIAL AND STATISTICAL REPORTS

Activity 13

Describe the following reports and how they might be used to inform other budgets or to monitor performance in an organisation.

1 Variance analysis reports.

2 The general ledger.

3 A capital expenditure budget.

4 A revenue/ expenses report.

5 A budgeted balance sheet.

6 A sales analysis report.

Written / Oral Questions

1 Explain the difference between fixed and flexible budgeting and explain how budgets are used to allocate resources for business operations.

2 Explain the purpose of each of the following: a cash flow budget, a capital expenditure budget, a sales budget and explain, in general terms, what procedures should be followed when collecting data to inform budgets.

3 What procedures should be followed to monitor final activities; and if a significant budget deviation is identified, what actions should be taken?

4 What actions might be taken to identify and evaluate options for improved budget performance?

5 Why do employees need to understand legislative requirements?

6 What financial reporting cycles can be used by an organisation?

7 Each industry has financial terminology unique to it. Do some research and identify and provide descriptions for terminology unique to your industry.

8 What is ratio analysis; how can it help in measuring business performance and setting objectives/ goals and how can you ensure accuracy when collecting data for drawing up financial and statistical reports?

Project 1

1 You are working in a medium-sized hotel business. The business comprises a restaurant, cafeteria, a piano bar, lounge bar and front bar. There is also a small motel complex out the back with 20 rooms.

Relative to that hotel, answer all the following questions:

How do you think this business could be divided into cost centres? Why might the organisation choose to make these divisions?
How will budgets contribute to operational efficiency and what types of budget might be appropriate for such an organisation? Why?
For each of the areas in the hotel, what direct and indirect costs would be applied and why must they be considered when drawing up budgets and developing financial reports?

What financial reports might be of benefit to this establishment? Why?

What types of waste might it be necessary to carefully monitor and control and why would this be necessary?

Who should be responsible for collecting, inputting and recording the data that contributes to budgets and who should be responsible for monitoring budgets - to determine how well performance is meeting expectations? Why?

What types of budget deviation might occur and what should be done if deviations are identified?

Answers should be well supported with evidence and appropriate examples. Upload your answer for assessment.

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