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SITXFIN003 Manage Finances Within a Budget  

 

SITXFIN003 Manage finances within a budget

 

 

Table of Contents

Assessment 1. 3

Assessment 2. 13

Assessment 3. 15

Reference. 24

 

 

 

Assessment 1

Question 1

 

Restaurant Budget and Actual Financial Performance
January(Budget) February(Budget) March(Budget) Budgeted Total(Jan-March) ActualSales(Jan-March) Variance(DifferencebetweenBudgetedandActualfigures) (F)FavorableVariance/(U)

UnfavorableVariance
SALES
Food 40,000 40,000 40,000 120,000 120,000 0 F
Beverage-non-Alcoholic 150 300 300 750 750 0 F
Beer 300 250 200 750 650 -100 U
Wine 300 350 500 1,150 1,200 50 F
Total Sales 40,750 40,900 41,000 122,650 122,600 -50 U
EXPENSES
Less:
Cost of Goods Sold
:Food 10,000 10,000 10,000 30,000 60,000 -30000 U
:Beverage 75 150 150 375 450 -75 U
: beer 150 125 100 375 400 -25 U
:wine 150 175 250 575 400 175 F
Less: Other Expenses
:rent 1,000 1,000 1,000 3,000 3,000 0 –
: Insurance 100 100 100 300 500 -200 U
:Council Rates 120 120 120 360 360 0 –
:Advertisements 200 250 250 700 700 0 –
:Electricity 250 250 250 750 1,200 -450 U
:Gas 100 100 100 300 400 -100 U
:Phone 200 200 200 600 800 -200 U
: Payroll-staffwages 8,000 8,500 8,500 25,000 30,000 -5000 U
TotalCost 20,345 20,970 21,020 62,335 98,210 -35875 U
Profit (Sales-Expenses) 20,405 19,930 19,980 60,315 24,390 -35925 U

Question 2

This answer is stated in the above table.

Question 3

As per the given data, the sale figure for the wine shows a positive trend because it increases every month whereas the sale figure for the beer shows a negative trend because its sales decrease every month(Atmadja, et al., 2018).

Question 4

The total sale of the business shows a negative result which is a very big risk for the business. The company expected more sales from the business but the budgeted sale of the business is not achieved. If the organization does not achieve the budgeted sale, then it can’t able to run the business for a long time in the market.

Question 5

An organization must need to investigate or review the cost of the food because the actual cost of the food is much higher than the budgeted cost of the food which is a very unfavourable condition for the business. This is a very big problem or issue for the business because this condition affects the business revenue. If a company can’t earn revenue,thenit can’t able to run the business in the competitive market. An organizationalso needs to investigate the cost of beer and beverages because the actual cost of beverages and beer is much higher than the budgeted cost which is a very unfavourable condition for the business(Atmadja, et al., 2018).

Question 6

The formula to calculate the food is

Food cost ÷ Food sales × 100

  1. A) Food Cost Percentage
  2. Budgeted cost

Food cost ÷ Food sales × 100

= 30000 ÷ 120000 × 100

= 25%

  1. Actual cost

Food cost ÷ Food sales × 100

= 60000 ÷ 120000 × 100

= 50%

  1. B) Beverage cost percentage
  2. Budgeted cost

Beverage cost ÷ beverage sales × 100

= 375 ÷ 750 × 100

= 50%

  1. Actual cost

Beverage cost ÷ beverage sales × 100

= 450 ÷ 750 × 100

= 60%

  1. C) Beer cost percentage
  2. Budgeted cost

Beer cost ÷ beer sales × 100

= 375 ÷ 750 × 100

= 50%

  1. Actual cost percentage

Beer cost ÷ beer sales × 100

= 400 ÷ 650 × 100

= 61.5%

  1. D) Wine cost percentage
  2. Budgeted cost

Wine cost ÷ Wine sales × 100

= 575 ÷ 1150 × 100

= 50%

  1. Actual cost percentage

Wine cost ÷ Wine sales × 100

= 400 ÷ 1200 × 100

= 33.33%

Question 7

An organization spends more money on food costs due to this reason the profitability of the business gets affected. It is very important to meet the food cost target. If the budgeted target of the food cost does not meet then the organization can’t able to run the business in a competitive market.

Question 8

Report

Introduction

This report is prepared to know the difference between actual cost and budgeted cost. The variance of budget shows both negative as well as positive results. The positive variance means the organization run in a profit or favourable condition whereas the negative variance means the organization run in a loss or unfavourable condition. In this report, I have provided information related to the expense variances, cost of goods sold variance, and sale variance.

Variance report

In this variance report, I have provided the information related to 3-month variances such as January, February, and March that are discussed below

 

Restaurant Budget and Actual Financial Performance
January(Budget) February(Budget) March(Budget) BudgetedTotal(Jan-March) ActualSales(Jan-March) Variance(DifferencebetweenBudgetedandActualfigures) (F)FavorableVariance/(U)

UnfavorableVariance
SALES
Food 40,000 40,000 40,000 120,000 120,000 0 F
Beverage-non-Alcoholic 150 300 300 750 750 0 F
Beer 300 250 200 750 650 -100 U
Wine 300 350 500 1,150 1,200 50 F
Total Sales 40,750 40,900 41,000 122,650 122,600 -50 U
EXPENSES
Less:
Cost of Goods Sold
:Food 10,000 10,000 10,000 30,000 60,000 -30000 U
:Beverage 75 150 150 375 450 -75 U
: beer 150 125 100 375 400 -25 U
:wine 150 175 250 575 400 175 F
Less: Other Expenses
:rent 1,000 1,000 1,000 3,000 3,000 0 –
: Insurance 100 100 100 300 500 -200 U
:Council Rates 120 120 120 360 360 0 –
:Advertisements 200 250 250 700 700 0 –
:Electricity 250 250 250 750 1,200 -450 U
:Gas 100 100 100 300 400 -100 U
:Phone 200 200 200 600 800 -200 U
: Payroll-staff wages 8,000 8,500 8,500 25,000 30,000 -5000 U
Total Cost 20,345 20,970 21,020 62,335 98,210 -35875 U
Profit (Sales-Expenses) 20,405 19,930 19,980 60,315 24,390 -35925 U

The above variance table shows the favourable as well as the unfavourable conditions of the business. According to this table, there is one problem that organizations must investigate to run their business in a competitive market. The problem is the total amount cost of goods showing unfavourable conditions because the actual cost of the good is more than the budgeted cost(Drury, 2018). The following points are discussed below in the regard to this variance –

Discussion with the existing supplier

It is very important for the organization they must conduct a meeting with their existing suppliers to reduce the cost of goods or ask for a discount from the supplier. If this problem is not resolved on time, then the restaurant can’t able to run the business in a competitive market. The organization must discuss the financing terms and prepaid freight with existing suppliers to reduce the cost of goods and earn more money from the targeted market.

Evaluation of staffing and rostering requirements

The organization needs to have the staffing and roasting requirements to be done in such a way that the maximum number of team members must be available in the big time to provide the best and most valuable services to the customer according to their demands. The company must conduct the training and development sessions to provide the best training to team members related to their job rules and the skills that they use to make good business relationships with the customers. The staff member of the organization must provide good options to the customer while taking orders of food, beverages, and beer(Drury, 2018).

Evaluation of the impact of potential roster changes

The impact of the potential roster changes is

  1. Organisation get the well-talented team members who perform their job roles properly which ultimately increase the sale of the business.
  2. Staff must check the quality and quantity of the product while receiving the goods from the supplier.
  3. Staff ordered goods only that were required to fulfil the demands of the customers.

Review of operating procedures

The senior manager of the company must monitor the procedures used by the team members to prepare the food for the customer to identify the waste that produces while preparing the food. Companies must include new dishes on the menu and change the price of their existing dishes to increase the sale of the business and attract new customers. The employees of the business must store the food according to storage temperature requirements to save the food from bacterial growth and spoilage(Shim, et al., 2015).

Sourcing the new supplier

If the existing supplier of the organization is not ready to give a discount or adjust the cost of goods then the organization must find a new supplier to get the best quality of goods at minimum cost.

Conclusion

The report is developed to know the favourable as well as the unfavourable conditions of the business. According to the current condition of the restaurant, an organization needs to take necessary action to run the business in the targeted market for the long term.

 

 

Assessment 2

Restaurant Budget(April-June)
April(Budget) May(Budget) June(Budget) Budgeted Total(April-June)
SALES
Food 48000 48000 48000 144000
Beverage-non-Alcoholic 180 360 360 900
Beer 360 300 240 900
Wine 360 420 600 1380
Total Sales 48900 49080 49200 147180
EXPENSES
Less:
Cost of  Goods Sold
:Food 10000 10000 10000 30000
:Beverage 75 150 150 375
:beer 150 125 100 375
:wine 150 175 250 575
Less: Other Expenses
:rent 1000 1000 1000 3000
:Insurance 107 107 107 321
:Council Rates 122.40 122.40 122.40 367.2
:Advertisements 500 550 550 1600
:Electricity 250 250 250 750
:Gas 100 100 100 300
:Phone 200 200 200 600
: Payroll-staff wages 8000 8500 8500 25000
  Total Cost 20654.4 21279.4 21329.4 63263.2
Profit(Sales-Expenses) 28245.6 27800.6 27870.6 83916.8

 

 

Assessment 3

Question 1

  1. a) superannuation
  2. b) wages or salaries
  3. c) Taxes and licensing fees
  4. d) public liabilities

Question 2

6 different expenses will vary according to the level of staffing such as

  1. Work cover insurance
  2. Superannuation (Shim, et al., 2015).
  3. Amount related to tool allowance and sick leave.
  4. Team member’s meal expenses
  5. Wages or salary
  6. Laundry

Question 3

There are names name of 6 different expenses that do not vary according to the level of staffing such as

  1. Bank loan
  2. Rent
  3. Water
  4. Gas
  5. Tax
  6. Electricity

Question 4

  1. If the actual cost is more than the budget cost.
  2. If any natural disaster occurs in the country.
  3. Inflation in the market.
  4. If the government increases the tax rate, unfortunately.

Question 5

  1. Natural disaster – in the case of natural disasters, suppliers will increase the cost of goods due to this reason restaurants also need to increase the cost of food which is not acceptable to the customers(Libing, et al., 2014).
  2. Increase in the tax rate – if the government increase the tax rate, then the company need to spend more money to purchase their goods or food item to prepare the food for the customers.

Question 6

  1. Financial manager of the organization can conduct the meeting with colleagues.
  2. Financial managers can be sent emails to their colleagues.
  3. Finance manager can print out a copy of the budget and deliver it to the cabins of colleagues.

Question 7

  1. Delivery invoice
  2. Payroll report
  3. Insurance fee

Question 8

The financial managers can use email to collect the information related to the financial transactions to prepare the budget. The financial manager also conducts meetings with the managers of all the departments to identify the fixed cost and projected sales that they want to achieve in the upcoming financial year. The financial manager keeps the records up to date to update the budget and financial transactions in the books of account. There are 4 sources that financial managers used to identify the income records such as

  1. Statement of bank
  2. Customers
  3. Dividends
  4. Rental and property yields(Libing, et al., 2014).

Question 9

  1. Suppliers provide the food items at a higher cost.
  2. Team members do not store the food item according to their temperature requirement which results in food items getting spoiled.
  3. Employees can’t able to handle the food items which increases wastage.
  4. Team members maybe still the food item for personal use.
  5. Chef may use a high quantity of food items to prepare the dish.

Question 10

It could be a valid solution because the deviation changes according to the area of business. For example – the cost of staff would be the same but the availability of the staff is more in the company.

Question 11

Some topics need to be discussed in the meeting with the F and B manager such as

  1. As a restaurant manager of the business, I am asking about the performance and sales of the past years.
  2. Asking the changes in the supplier, property, and management.
  3. Expectation or goal of the organization which they want to achieve in the next financial year.
  4. Provide suggestions to improve the underperforming business area.

Question 12

The circumference is an increase in the number of bookings during the offseason(Saputra, et al., 2020).

The organization needs to be higher more employees because in the offseason staff take leaves. If the staff is available then the quality of services and goods is maintained properly.

Question 13

  1. Bank deposit documentation – it is a type of slip that use by the depositor to deposit the cash in the bank.
  2. Bank statement – it is a type of accounting summary which provide information related to the financial transaction that the organization used to create the budget.
  3. Banking summaries – it is a type of summary which show transaction related to the case as well as check dad dan by the organization(Saputra, et al., 2020).
  4. Business activities statements – it is a type of form that organizations lodge in the Australian taxation office to pay their tax obligation.
  5. Cheque books – it is a type of book or tool that people use to withdraw their cash from the bank.
  6. Credit card transaction statement – it is a statement that provides information related to the purchases made by the person on credit.
  7. Invoice – it is a type of commercial document that is given by the supplier to the customer when they purchase the product from their company.
  8. Journal entries – it is a type of entry that provides information related to the financial transaction of the business.
  9. Labour and wages report – it is a type of document which include the information related to the name of the employers, ABN number, total wages paid to employees, address of the employer, etc.
  10. Merchant statement – it is a type of document which provide information related to the amount given by the customer in the exchange for the purchase of the good.
  11. Transaction report – it is a type of report that includes the data which contain the information related to all the business transaction of a particular year.

Question 14

  1. Cash budget – it is the budget that includes information related to the expected or projected cash inflow and outflow of the business in a particular financial year.
  2. Cash flow budget – it is a type of budget that provides information related to assumed cash receipt on cash expenditure that occurs in a particular period.
  3. Department budget – it is a tool that organizations used to estimate the income and expenses of departments to achieve the financial goal of the business.
  4. Event budget – it is a type of budget that company created while conducting events to attract new customers(Alabdullah & Maryanti, 2021).
  5. Project budget – it is a budget that is created by the organization to identify the income that they earn from completing the particular project and the expenses that they spend to complete the particular project.
  6. Purchasing budget – it is a budget that an organization created to estimate the expenses that they incurred to purchase the goods from the supplier.
  7. Sale budget – it is a budget that an organization created to estimate the sale that they earn in a particular financial year.
  8. Wage budget – it is a budget created by the organization to estimate the expenses that spend on providing salaries or wages to the Employees.
  9. Statical report – This is a report that provides information related to the estimated expenses incurred by the company in a particular year and revenue generated from those expenses.
  10. Whole of organization budget – it is a type of budget that an organization creates to estimate the expenses incurred in a particular year and revenue that they earn from a particular area.

Question 15

Circumstance 1 – Construction work. When customers visit the restaurant at that time, they find a parking spot. So, in this condition restaurant not consider the sale of the business.

Circumstance 2 – Natural disaster. Due to the covid-19 virus, people get ill and are terminated from their jobs(Alabdullah&Maryanti, 2021).

Question 16

  1. Review the past year’s performance of the business.
  2. Compare the business performance with the competitor’s business performance.

Question 17

The accounting software is XERO

It automatically calculates the amount and record all the financial transaction according to the financial system.

Question 18

It is very important to control the budget because businesses face losses if the actual cost increases or goes up. As a finance manager, I review the financial transaction to identify the area that needs to improve. After identifying the area, I provide information to the general manager regarding the underperformed area to improve it.

Question 19

If the organization uses the budget properly then they get the information related to costs that go up or more than the budgeted cost. With the help of this information, the manager’s corporate plan is to reduce the cost to run the business under favourable conditions.

Question 20

It is the type of statement that contains information related to cash outflow as well as an inflow in the business(Maheshwari, et al., 2021).

Question 21

  1. Weekly – The finance manager reviews the budget on weekly basis to identify the performance of the business.
  2. Monthly – The finance manager of the business reviews the performance every month by comparing the last month’s performance of the business.
  3. Yearly – The finance manager reviews the performance of the business on yearly basis to identify the financial position of the business(Maheshwari, et al., 2021).

Question 22

Food wastage

Question 23

It is the type of earning that earn by the sales team as an incentive when they achieve their sales targets more than the budgeted sale targets.

Question 24

The difference between the budgeted cost and actual cost is known as variance.

Question 25

Financial report Definition Purpose
Budget It is a type of plan that is created to estimate the income and expenses of the financial year. It is created to know the estimated cost incurred by the company to generate profit from the business.
Covers It is a type of transaction that is taken to reduce the liability of the business(Edwards &Boyns, 2012). To reduce the liability of the business.
Expenditures Expenditure is the cost that spends by the company to run its business. It is important to run the business operations.
Labour Labour is the type of manpower that organizations use to achieve their goals. Archive the goals of the business.
Occupancy rate It is the rate that an organization uses to identify the total amount that the current organization has to complete a particular project. It is the rate that an organization uses to identify the total amount that the current organization has to complete a particular project.
Purchases Purchase is the term used when a buyer purchases a product from a business. Purchase is the term used when a buyer purchases a product from a business.
Sales It is the term that is used when organizations sell their products. It is the term that is used when organizations sell their products.
Stocks Stock is the type of inventory that the company store to complete their project. Stock is the type of inventory that the company store to complete their project.
Transactions Transfer of goods and services. Transfer of goods and services(Ward, 2012).
Transaction exempted It is a type of security transaction that does not need any legal requirements. It is a type of security transaction that does not need any legal requirements.
Unit sold This term is used when a company sells its commodity to the customers. This term is used when a company sells its commodity to the customers.
Wages The wages are given by the organization to their employees. The wages are given by the organization to their employees.

Reference

Alabdullah, T. T., &Maryanti, E. (2021). Internal Control Mechanisms in Accounting, Management, and Economy: A review of the Literature and Suggestions of New Investigations. International Journal of Business and Management Invention, 10(9).

Atmadja, A. T., Saputra, K. A. K., &Koswara, M. K. (2018). The influence of village conflict, village apparatus ability, village facilitator competency and commitment of local government on the success of budget management. Academy of Accounting and Financial Studies Journal, 22(1), 1-11.

Drury, C. (2018). Cost and management accounting. Cengage Learning.

Drury, C. M. (2013). Management and cost accounting. Springer.

Edwards, R., &Boyns, T. (2012). A history of management accounting: The British experience. Routledge.

Libing, Z., Xu, Z., &Ruiquan, Z. (2014, September). Application of the balanced scorecard in the university budget management. In Conference on Informatisation in Education, Management and Business (IEMB-14).

Maheshwari, S. N., Maheshwari, S. K., & Maheshwari, M. S. K. (2021). Principles of Management Accounting. Sultan Chand & Sons.

Saputra, K. A. K., Subroto, B., Rahman, A. F., &Saraswati, E. (2020). Issues of morality and whistleblowing in short prevention accounting. International Journal of Innovation, Creativity and Change, 12(3), 77-88.

Shim, J. K., Siegel, J. G., Dauber, N. A., & Qureshi, A. A. (2015). Accounting handbook. Barrons Educational Series, Incorporated.

Ward, K. (2012). Strategic management accounting. Routledge.