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SITXFIN005A Prepare and monitor budgets

Assessment Submission details:

  1. Please include following details on the top of your assessment:
  • Your Name
  • Your Student Id
  • Your Trainer’s name
  • Title of your Assessment
  • Assessment Due Date
  • Actual Submission Date

Please Note: Any changes in the assessment due date must be approved by your trainer.

  1. This assessment can be hand written or in Microsoft word format. Following settings should be made for this assignment to keep consistency among all the assessments:
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  1. If hand written assessments are submitted, hand writing needs to be clear and legible.
  2. Do not forget to attach the Cover Sheet at the front of the assessment.
  3. Make sure you have signed the Cover sheet to declare this is your own work.
  4. You can e-mail this assessment to your trainer’s e-mail address with following details:

In ‘subject’ mention your ‘student Id – Your name’.

Achieving Competence:

To be deemed competent in this assessment you must:

  • Correctly address all of the assessment requirements as described in this task
  • Correctly address all of the submission instructions
  • Successfully complete the Assessment Questions
  • Submit assessment on or before the due date with an assessment cover sheet

Performance objective:

Performance Evidence

The purpose of this assessment is to assess your ability to complete tasks outlined in elements and performance criteria of this unit in the context of the job role, and:

  1. prepare a budget for a business that meets the specific business’ needs
  2. demonstrate the following when preparing the above budget:
  • consultation on components
  • analysis of factors that impact on the budget
  • completion of draft and final versions of budget within designated timelines

Knowledge Evidence

  1. types of budgets:
  • cash budgets
  • cash flow budgets
  • departmental budgets
  • event budgets
  • project budgets
  • purchasing budgets
  • sales budgets
  • wage budgets
  • whole of organisation budgets
  1. budget terminology
  2. specific industry sector and organisation:
  • role and nature of budgets
  • budget formats, budget performance and financial reports
  • financial reporting procedures and cycles
  • features and functions of accounting software programs used to prepare and monitor budgets
  1. internal and external factors that impact on budget development:
  • growth or decline in economic conditions
  • human resource requirements
  • new legislation or regulation
  • organisational and management restructures
  • organisational objectives
  • scope of the project
  • shift in market trends
  • significant price movement for certain commodities or items
  • supplier availability and cost
  1. budget preparation and monitoring practices and techniques:
  • sources and contents of data required for budget preparation:
  1. competitor research
  2. customer or supplier research
  • declared commitments in areas of operation
  1. financial information from suppliers
  2. financial proposals from key stakeholders
  3. income and expenditure for previous time periods
  • departmental, event or project budgets
  • grant funding guidelines or limitations
  1. management policies and procedures
  2. organisational budget preparation guidelines
  3. performance information from previous periods
  • techniques for making budget estimates
  • common reasons for deviations and budget deviation management

Assessment description:

Part A 

You are required to complete a draft budget based on information and factors that were determined during an executive meeting at Hotel Futura.

  1. Access the excel spreadsheet named “Task 1-Hotel Futura Budget Forecast”. The first tab on this spreadsheet is labelled “Departments Small” and shows the existing budget figures for the 2016 financial year.
  2. Use the template “Draft Budget” on the second tab of the spreadsheet and perform the calculations below using basic formulas.

Your forecast needs to include the Dollar Figures and the % values for these affected by changes outlined below. The % values must be listed for each expense item shown in the Expenses Analysis for each department. You have met with the department heads of Hotel Futura and the following details have been discussed to prepare your draft budget for 2017:

  1. Rooms Division:
  2. Due to renovations the rooms available have been reduced to 96%.
  3. The forecasted occupancy rate has been adjusted to 80%.
  4. The revenue per available room needs to be increased to $150.00
  5. The COGS will increase to 15% of total room revenue
  6. Staff costs need to be increased to 20% of total room revenue to allow for increases in superannuation and awards.
  7. Other Expenses need to increase to 8% of total room revenue to cover electricity price rises. 
  1. Catering:
  2. The food revenue will be increased by 15% due to a new marketing campaign and specialty menus
  3. The beverage revenue will increase by 8%.
  4. Staff costs need to be adjusted to 44% of the food budget.
  5. Other Expenses will need to be increased to 7%.
  1. Banquet:

The Banquet Division will be directly affected by the new marketing campaign which has been directed at daytime seminars and corporate functions. For this purpose the kitchen has received specialised equipment including multiple combi steamers, hold-o-mats and sous-vide equipment.

  1. The new food revenue budget was set at $ 2,000,000.00 ($2 Million) and the beverage revenue was increased by 75%.
  2. The COGS will increase to 26%.
  3. The staff costs have been reduced to 19%.
  4. Other Expenses will need to increase to 14%.
  1. Room Service:
  2. The room service revenue from food needs to be increased by 15%.
  3. Due to a different system to clear floors and organise delivery, the staff costs will be reduced to 34%. 
  1. Mini Bar:

The mini bar budget remains unchanged and increased staff costs are absorbed through different processes.

  1. Bar Budget:
  2. The food revenue budget has been increased by 25% with the implementation of a Tapas Menu.
  3. The Beverage Revenue budget has been increased 20% with the introduction of a new cocktail bar and happy hour specials.
  4. Staff costs will need to be adjusted to 36%.
  5. Other Expenses need to be increased to 18%.

(Find the Provided template)

Part B

You have provided the chief financial controller with the draft budget for 2017. Following the recent executive meeting where the draft budget was discussed, you are now required to establish the final budget reflecting the changes based on the latest actuals and variances as well as major road works which will affect Futura Restaurant and Bar during 2017.

  1. Access the excel spread sheet named “Task 2-Budget Futura_Rest.&Bar”. The first tab on this spreadsheet is labelled “Futura Restaurant and Bar” and shows the Draft budget figures for the 2017 financial year.
  2. Use the template “Revised Budget” on the second tab of the spreadsheet and perform the calculations below using basic formulas based on the following changes:
Month Customer numbers Average Spend (Food) Average Spend (Beverage)
January 1850  $     45.00 $ 9.70
February 2000  $     37.00 $ 9.70
March 700  $     42.00 $ 9.70
April 1200  $     48.00 $ 9.70
May 1200  $     36.50 $ 9.70
June 600  $     35.00 $ 9.70
July 950  $     34.00 $ 9.70
August 800  $     38.00 $ 9.70
September 900  $     29.00 $ 9.70
October 650  $     29.50 $ 9.70
November 980  $     35.50 $ 9.70
December 2200  $     48.00 $ 9.70
  1. Calculate the anticipated Food revenue for each month and the yearly total.
  2. Calculate the anticipated Beverage revenue per month and the yearly total.
  3. Calculate the Total Revenue for each month and the yearly total.
  4. Calculate the overheads total for each month (at 90% of turnover for each for each month with 1000 or more customers and at 96% for each month with less than 1000 customers) and the yearly total.
  5. Calculate the profit for each month and the yearly total.
  6. Calculate the Cost of Goods Sold for food and beverages, given a combined percentage of 32%.
  7. Calculate the staff costs for each month at 31% for each month with 1000 or more customers and at 35% for each month with less than 1000 customers.
  8. Calculate the ‘Other overheads” for the operation.
  9. Print a copy of the revised budget.
  10. Print the revised budget showing all formulae used.

(Find the provided template)

Part C

Read the following 3 scenarios and answer the questions attached for each scenario.

Scenario 1:

The finance team has created budget forecasts for Hotel Futura based on carefully researched factors for the last 3 years and these were always very accurate. The recent budget which included all departments of the hotel was implemented 3 months ago and the forecasted figures for Food Cost and COGS/Beverages in both the Restaurant and the Bar Operations have blown out by nearly 4.5 percent.

Question 1: What could be the reasons for this? List 5 examples of areas you would investigate and explain why?
The reason could be mainly that budget forecasting tells whether Hotel Futura mainly headed in the accurate direction, particularly estimating the income and revenue amount that will mainly attained in the upcoming period. The areas that would be investigated are given below:

1. Expected revenue – This is the amount of money expected by the business for making from the sales of services and goods.

2. Fixed cost – It includes salaries of employees that Hotel Futura pays regularly for the specific expense.

3. Cash flow

4. Profit margins

5. One-time expenditures (La Cava, et al., 2016)

Scenario 2:

Hotel Futura has successfully operated for 7 years. During this period, overall turnover has doubled, and during the past 3 budget periods annual budgets have been increased by 15% each year which was exceeded each time. During the last 6 months however, management has noticed that the opposite trend seems to be occurring now.

Question 1: List 5 external factors which could contribute to this and explain which methods you would use to determine this?
Five external factors that can contribute to this are given below:

1. Political consequences

2. Competition

3. Micro- and macroeconomics

4. International relations

5. Technological procedures

The methods that would be utilized for determining are given below:

1. Incremental budgeting – It is accurate for use if the initial drivers of cost do not mainly change from one year to another year.

2. Activity-based budgeting – In this, Hotel Futura will be required to mainly first particularly determine all activities that require undertaking for meeting the target of sales (La Cava, et al., 2016).

Scenario 3:

You have successfully negotiated the draft budget with each department head of the Hotel which has now been approved by the director and implemented 6 weeks ago.

You have finalised the financial data of the Hotel for the next management meeting and noticed the following:

Department Budget Actual Variance
Kitchen/Food Cost 28% 32% (-)$ 13467

  1. The recently appointed F&B Manager has purchased 240 bottles of Hill of Blessings @ $90 each which represents a saving of $30 per bottle. However this exceeds the par stock level by 220 bottles and has created a cash flow problem, given the negative performance of the kitchen during this period as well.
Question 1: Which reports would you need to prepare for these issues?
For these identified issues the reports which need to be prepared are the:

1) Cash flow statement report-in this report financial statements will be prepared which sum up the cash amount which enters and then leaves the organization. In the cash flow statement operating cash flow of the organization is recorded. On an annual and quarterly basis, these flows are reported. in this report, all the cash equivalents and cash are summarized. In the cash flow reports, all the cash management by the organization is highlighted (PADMAPRIYA, 2021).

2) Department reports- to identify the issues department reports can be prepared. In this report, these losses can be identified in the particular department.

3) Budget variance reports – the document that compares the outcomes of financial planning with the actual financial outcomes. It also helps the management to identify the areas in which the organization can make improvements (Junita, 2018).

Question 2: Who is it essential to involve when these matters need to be discussed?
Some of the people who must be involved in these kinds of matters are-

  1. Front & Back officer
  2. Chief Executive Officers
  3. Chief Financial Officers
  4. Financial operational managers
  5. Executive Chef
Question 3: Suggest options to address and rectify these issues.
Some of the options which can be used to address and rectify the issues are-

  1. At the minimum price, bottles can be sold.
  2. Coasts of the issues can be recognized and to solve the issues methods can be determined.
  3. With the employee’s and vendor’s communication can be addressed (PADMAPRIYA, 2021).
Question 4: How could the cash flow issue be addressed?
To address the issues of the cash flow some of the methods which can be used are-

  1. A line of credit can be set.
  2. With the vendor, the terms and conditions of the payment can be negotiated.
  3. At the minimum cost hills of blessing, bottles can be sold.
  4. Unwanted expenses can be reduced.
  5. Training can be provided to the employees for resource wastage and them effectively and efficiently.
  6. A monthly business budget can be used (Junita, 2018).


Alves, M. A. (2016). O modelo incremental como teoria para o processo orçamentário. Revista Brasileira de Planejamento e Orçamento6(1), 124-137.

Junita, A. (2018). The effect of budget variances on the local government budget changes with legislature size as moderator.

La Cava, G., Hughson, H., & Kaplan, G. (2016). The household cash flow channel of monetary policy. RBA Research Discussion Papers rdp2016-12 Reserve Bank of Australia.

PADMAPRIYA, B. (2021). An Empirical Study of Management of Cash Flow in SMEs and Organization. Journal of Contemporary Issues in Business & Government27(3).

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