Table of Contents
Table of Contents 1
Assessment instructions 3
Assessment requirements 6
Candidate Details 7
Assessment – BSBFIN501 – Manage budgets and financial plans 7
Activity 8
Activity 1A 8
Activity 1B 9
Activity 1C 10
Activity 1A-1C Checklist 11
Activity 2A 12
Activity 2B 13
Activity 2C 14
Activity 2D 15
Activity 2A-2D Checklist 16
Activity 3A 18
Activity 3B 19
Activity 3C 20
Activity 3D 21
Activity 3A-3D Checklist 22
Knowledge Activity (Q & A) 23
Section B: Knowledge Activity (Q&A) Checklist 24
Performance Activity 25
Performance Activity Checklist 29
Competency record to be completed by the assessor 31
Case Study A – Communicate details of agreed budget and financial plans to relevant team members 32
Case Study B 33
Case Study C – Providing support 34
Case Study D 35
Case Study E 36
Case Study F 37
Appendix 1 38
Appendix 2 39
Appendix 3 41
Appendix 4- Cash flow Projections for 2021 and 2022 42
Instructions to Learner
Assessment instructions
Overview
Prior to commencing the assessments, your trainer/assessor will explain each assessment task and the terms and conditions relating to the submission of your assessment task. Please consult with your trainer/assessor if you are unsure of any questions. It is important that you understand and adhere to the terms and conditions, and address fully each assessment task.
Written work
Assessment tasks are used to measure your understanding and underpinning skills and knowledge of the overall unit of competency. When undertaking any written assessment tasks, please ensure that you address the following criteria:
Address each question including any sub-points
Demonstrate that you have researched the topic thoroughly
Cover the topic in a logical, structured manner
Your assessment tasks are well presented, well referenced and word processed
Active participation
It is a condition of enrolment that you actively participate in your studies. Active participation is completing all the assessment tasks on time.
Plagiarism
Plagiarism is taking and using someone else’s thoughts, writings or inventions and representing them as your own. Plagiarism is a serious act and may result in a learner’s exclusion from a course. When you have any doubts about including the work of other authors in your assessment, please consult your trainer/assessor. The following list outlines some of the activities for which a learner can be accused of plagiarism:
Presenting any work by another individual as one’s own unintentionally
Handing in assessments markedly similar to or copied from another learner
Presenting the work of another individual or group as their own work
Handing in assessments without the adequate acknowledgement of sources used, including assessments taken totally or in part from the internet.
If it is identified that you have plagiarised within your assessment, then a meeting will be organised to discuss this with you, and further action may be taken accordingly.
Collusion
Collusion is the presentation by a learner of an assignment as their own that is, in fact, the result in whole or in part of unauthorised collaboration with another person or persons. Collusion involves the cooperation of two or more learners in plagiarism or other forms of academic misconduct and, as such, both parties are subject to disciplinary action.
Competency outcome
There are two outcomes of assessments: S = Satisfactory and NS = Not Satisfactory (requires more training and experience).
Once the learner has completed all the assessments for this unit of competency, the learner will be awarded “Competent” (C) or “Not Competent” (NC) for the relevant unit of competency.
Confidentiality
The college will treat anything, including information about your job, workplace, employer, with strict confidence, in accordance with the law. However, you are responsible for ensuring that you do not provide us with anything regarding any third party including your employer, colleagues and others, that they do not consent to the disclosure of. While we may ask you to provide information or details about aspects of your employer and workplace, you are responsible for obtaining necessary consents and ensuring that privacy rights and confidentiality obligations are not breached by you in supplying us with such information.
Assessment appeals process
If you feel that you have been unfairly treated during your assessment, and you are not happy with your assessment and/or the outcome as a result of that treatment, you have the right to lodge an appeal. You must first discuss the issue with your trainer/assessor. If you would like to proceed further with the request after discussions with your trainer/assessor, you need to lodge your appeal via the complaint and appeal form which is available on the college website.
Recognised prior learning
Learners will be able to have their previous experience or expertise recognised on request.
Special needs
Learners with special needs should notify their trainer/assessor to request any required adjustments as soon as possible. This will enable the trainer/assessor to address the identified needs immediately.
Assessment requirements
Assessment can be:
Direct observation
Product-based methods e.g. reports, role plays, work samples
Portfolios – annotated and validated
Questioning.
The assessment activities in this workbook assess aspects of all the elements, performance criteria, skills and knowledge and performance requirements of the unit of competency.
To demonstrate competence in this unit, you must undertake all activities in this workbook and have them deemed satisfactory by the assessor. Once you have demonstrated the required level of performance, you will be deemed competent in this unit.
As part of the assessment process, all learners must abide by any relevant assessment policies as provided during induction.
Candidate Details
Assessment – BSBFIN501 – Manage budgets and financial plans
Please complete the following activities and hand in to your trainer/assessor for marking. This forms part of your assessment for BSBFIN501 – Manage budgets and financial plans.
Name: _____________________________________________________________
Learner ID: ______________________________________________________________
Email: _____________________________________________________________
Declaration
I declare that no part of this assessment has been copied from another person’s work with the exception of where I have listed or referenced documents or work and that no part of this assessment has been written for me by another person. I also understand the assessment instructions and requirements and consent to being assessed.
Signed: ____________________________________________________________
Date: ____________________________________________________________
If activities have been completed as part of a small group or in pairs, details of the learners involved should be provided below:
This activity workbook has been completed by the following persons and we acknowledge that it was a fair team effort where everyone contributed equally to the work completed. We declare that no part of this assessment has been copied from another person’s work with the exception of where we have listed or referenced documents or work and that no part of this assessment has been written for us by another person.
Learner 1: ____________________________________________________________
Signed: ____________________________________________________________
Learner 2: ____________________________________________________________
Signed: ____________________________________________________________
Learner 3: ____________________________________________________________
Signed: ____________________________________________________________
Activity
Activity 1A
Objective To provide you with an opportunity to identify how to access budget and financial plans for work team.
1. Identify and discuss the personnel you need to consult with to access budget and financial plans and what issues might need to be addressed.
2. Discuss how to access budgets and financial plans for work team. Fill in the table below.
Budget/Financial plans Source of information
Cash flow budget/projections
Operating budget/projections
Financial budget/projections
Sales budget/projections
Production budget/projections
Overhead budget/projections
Personnel budget/projections
Marketing budget/projections
Static Budget/projections
Master Budget/projections
3. Discuss at least two principles and techniques involved in managing a budget.
Activity 1B
Objective To provide you with an opportunity to identify how to evaluate budget and financial plan outcomes with required organisational personnel, and to negotiate any changes required to be made to budget and financial plans with required organisational personnel.
Activity 1) Referring to Happy Auto Services, what are the techniques and principles used to evaluate the budget and financial plans?
Activity 1C
Objective To provide you with an opportunity to identify how to prepare contingency plans in the event that initial plans need to be varied.
1. Identify what is contingency plan? Note five possible situations to plan for contingency plan.
2. Identify how to create a contingency plan in the event that initial plans need to be varied
Activity 1A-1C Checklist
This should be used by the trainer/assessor to document the learner’s knowledge as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Marking Checklist
1A Has the learner identify and discuss relevant personnel to consult with to access budget and financial plans and discuss potential issues? Yes No
(Please circle)
1A Has the learner discuss how to access budget and financial plans for work team and fill in the table correctly? Yes No
(Please circle)
1A Has the learner discuss the principles and techniques of budget in details? Yes No
(Please circle)
1B Did the learner discuss what are the principles and techniques involved in managing evaluation of budgets and financial plans? Yes No
(Please circle)
1C Did the learner Identify what is contingency plan and note five possible situations to plan for contingency plan. Yes No
(Please circle)
1C Did the learner identify how to create a contingency plan in the event that initial plans need to be varied Yes No
(Please circle)
Comments
Provide your comments here:
The learner’s performance was: Not yet satisfactory Satisfactory
Activity 2A
Objective To provide you with an opportunity to identify how to communicate details of agreed budget and financial plans to relevant team members.
1. Identify tools for disseminating workplace information
2. Refer to Case Study A and follow the instruction mentioned in the case study to complete the task.
Make a group of 3-5 people or as instructed by the trainers to discuss ways to communicate details of the agreed budget to relevant team members.
Guideline: Refer to a template provided in the Learner Guide under topic 2.1 and complete the table.
Activity 2B
Objective To provide you with an opportunity to identify how to support team members to access resources and systems to perform required roles.
1. Using the information from Case Study B, identify what product should choco café manager buy.
2. Identify what are the required resources and systems to support team members to make informed decision and perform required roles.
3. Using the information from Case Study C, identify what support Sam may require improving his performance. Discuss how you would monitor this afterwards.
Activity 2C
Objective To provide you with an opportunity to identify how to implement processes to monitor actual expenditure, control costs and modify contingency plans as required according to financial objectives.
1. Discuss the steps to monitor actual expenditure and control costs.
Refer to Case Study D and answer question 2
2. Using the steps discussed in Question 1, monitor actual expenditure, control costs and modify contingency plans as required according to financial objectives.
Activity 2D
Objective To provide you with an opportunity to identify how to report on budget and expenditure according to organisational protocols.
1. What is a business activity statement and what information should be included.
2. You are assigned to complete a Business Activity Statements report for the company. The company’s protocols always refer to tips and protocols from the Australian Taxation Office. Identify how to report on budget and expenditure according to organisational protocols.
Guideline: Research information from the Australian Taxation Office website on how to complete Business Activity Statements and answer the question.
3. What is the record-keeping requirements for the Australian Taxation Office for GST and BAS for auditing purposes?
Activity 2A-2D Checklist
This should be used by the trainer/assessor to document the learner’s knowledge as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Marking Checklist
2A. Did the learner Identify tools for dissemination workplace information Yes No
(Please circle)
2A. Did the learner identify ways to communicate details of agreed budget to relevant team members Yes No
(Please circle)
2B Using information from Case Study B, has the learner identify what product choco café manager should buy? Yes No
(Please circle)
2B Has the learner identify what are the required resources and systems to support team members to make informed decision and perform required roles. Yes No
(Please circle)
2B Using the information from Case study C, has the learner identify what support to provide to Sam and discuss how to monitor afterwards. Yes No
(Please circle)
2C. Has the learner discuss the steps to monitor actual expenditure and control costs? Yes No
(Please circle)
2C. Has the learner demonstrate ability to monitor actual expenditure, control costs and modify contingency plans as required according to financial objectives? Yes No
(Please circle)
2D. Did the learner discuss what is business activity statement and what information should be included? Yes No
(Please circle)
2D. Did the learner identify how to report on budget and expenditure according to organisational protocols? Yes No
(Please circle)
2D. Did the learner identify what is the record keeping requirements for Australian Taxation Office for GST and BAS for auditing purpose? Yes No
(Please circle)
Comments
Provide your comments here:
The learner’s performance was: Not yet satisfactory Satisfactory
Activity 3A
Objective To provide you with an opportunity to identify how to collect information on effectiveness of financial management processes within work team.
1. Identify how to have an effective financial management process within a work team.
2. Identify what information to collect to evaluate the effectiveness of the financial management process.
3. Identify what information can be used to analyse the effectiveness of the financial management process.
Activity 3B
Objective To provide you with an opportunity to identify how to analyse variance between actual and budgeted finances.
1. What is variance analysis and identify 3 possible causes of variance
Refer to Case Study E
2. Analyse variance between actual and budgeted finances
Activity 3C
Objective To provide you with an opportunity to identify and recommend improvements to existing financial management processes.
1. Refer to Case study F Part A, review and make recommend improvements to existing financial management processes.
Activity 3D
Objective To provide you with an opportunity to identify how to implement agreed improvements according to financial objectives of work team and organisation, and to evaluate agreed improvements.
1. Identify the process to implement agreed improvements according to financial objectives of work team and organisation, and to evaluate agreed improvements.
Refer to Case Study F (Part B) and answer question 2
2. Identify how to implement agreed improvements (identified in Activity 3C) according to financial objectives of work team and organisation, and to evaluate agreed improvements.
Activity 3A-3D Checklist
This should be used by the trainer/assessor to document the learner’s knowledge as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Marking Checklist
3A. Did the learner identify how to have effective financial process within work team? Yes No
(Please circle)
3A. Did the learner identify what information to collect to evaluate effectiveness of financial management process? Yes No
(Please circle)
3A. Did the learner identify what information can be used to evaluate the effectiveness of financial management process? Yes No
(Please circle)
3B. Did the students understand what variance analysis is and identify 3 possible causes of variance? Yes No
(Please circle)
3B. Referring to Case Study E, did the students demonstrate ability to analyse the variance between actual and budgeted finances? Yes No
(Please circle)
3C. referring to Case Study F Part A, did the learner review and make recommended improvements to existing financial management process? Yes No
(Please circle)
3D Has the learner identify the process to implement agreed improvements according to financial objectives of work team and organisation, and to evaluate agreed improvements? Yes No
(Please circle)
3D Refer to Case Study F. Has the learner identify how to implement agreed improvements according to financial objectives of work team and organisation, and to evaluate agreed improvements. Yes No
(Please circle)
Comments
Provide your comments here:
The learner’s performance was: Not yet satisfactory Satisfactory
Knowledge Activity (Q & A)
Objective: To provide you with an opportunity to show you have the required knowledge for this unit.
The answers to the following questions will enable you to demonstrate your knowledge of:
Basic accounting principles
Types of budgets and financial plans
Legislation and current ATO requirements, including the goods and services tax (GST)
Key requirements for financial record keeping and auditing
Principles for managing work teams
Principles and techniques involved in managing:
budgeting
cash flows
electronic spreadsheets
Goods and Services Tax
ledgers and financial statements
profit and loss statements
evaluation of budget and financial plans.
Answer each question in as much detail as possible.
All answers will vary, but the learner should be able to answer each question competently.
Identify and explain in detail three aspects of basic accounting principles.
Identify three types of budgets and financial plans.
Explain the legislation and current Australian Taxation Office (ATO) requirements, including the goods and services tax (GST).
What are the key requirements for financial record keeping and auditing?
Identify and explain the five functions of managing work teams.
Describe the principles and techniques involved in managing:
Budgeting
Cash flows
Electronic spreadsheets
Goods and services tax
Ledgers and financial statements
Profit and loss statements
Evaluation of budget and financial plans.
Section B: Knowledge Activity (Q&A) Checklist
This should be used by the trainer/assessor to document the learner’s knowledge as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Marking Checklist
Did the learner identify and explain in detail three aspects of basic accounting principles correctly?
Yes No
(Please circle)
Did the learner identify three types of budgets and financial plans correctly? Yes No
(Please circle)
Did the learner explain the legislation and current Australian Taxation Office (ATO) requirements, including the goods and services tax (GST) correctly? Yes No
(Please circle)
Did the learner identify key requirements for financial record keeping and auditing correctly? Yes No
(Please circle)
Did the learner identify and explain the five functions of managing work teams correctly? Yes No
(Please circle)
Did the learner describe the principles and techniques involved in managing which mentioned below correctly?
Budgeting
Cash flows
Electronic spreadsheets
Goods and services tax
Ledgers and financial statements
Profit and loss statements
Evaluation of budget and financial plans. Yes No
(Please circle)
Comments
Provide your comments here:
The learner’s performance was: Not yet satisfactory Satisfactory
Performance Activity
Context Scenario- Happy Auto Services
Happy Auto Services is Sydney’s premier automotive Service & Repair centre. The professionals at Happy Auto are always ready to offer reliable, cost-effective, and honest service with customer’s satisfaction as their top priorities. At Happy Auto Services, customers can count on straightforward auto repair and their professional’s dedication to getting you back on the road as quickly and safely as possible.
The owners of Happy Auto Services plan to increase profitability of the business by adding a new workshop at Sydney’s Newtown area. This new location is known to have younger demographics with car or motorcycles.
Therefore, the owner decided to modernize and equip their workshop with newest technology diagnostic equipment for their experienced technicians to operate. Customers can also sit back and relax in their newly designed waiting lounge at their comfort while the team service their car. This is to provide best service to valued customer and promote business through positive word of mouth. The owners have acquired a quote from the renovation company and the total cost is estimated to be $200,000.
Workplace policy
Having an emergency fund is a top priority
Delivering quality service and repair is vital to success of the business.
It is essential to attract and retain experienced technicians/employees
Use the incremental budgeting technique to prepare budget/financial plans
Use breakeven analysis method for capital budgeting evaluation
Workplace Procedure on how to create/manage a budget
Business goals based on the plan
Examine your revenue
Identify your fixed expenses
List variable cost
Draw up projects that advance your business goals. Identify the cost of the project.
Set your projected sales target.
Create the budget and financial plan to management for approval. If they have objections, either convince them to support your budget or make the requested changes.
Answer the activity in as much detail as possible.
Instructions to Assessor:
Question 1 and 2 should be carried out in the workplace or simulated environment.
Equipment needed:
Access to a range of digital technologies, i.e. computer, printer and the internet
Financial documentation provided by accessor
Opportunity to communicate with another learner/colleague
Access to other learners
Space for role play
Question 1. Identify workplace policy and procedures for setting budget and financial plan
Referring to the case scenario (Auto Services), learner should conduct a roleplay with another learner. Assessor to provide Auto Services case scenario and appendix 1 to learner. The roleplay should consist of the learner acting as the owner discussing the workplace policies and procedures with another finance staff of the company involved with budget. Learner should make notes of their discussion.
Question 2. Demonstrate how to create and manage a budget and financial plan for one reporting period
The company has a quarterly reporting period for budget plan so that finance team can closely monitor the budget and adjust accordingly if necessary. Referring to the Case Scenario (Auto Service), create and manage a budget plan for the period ended 31 March 2021 using Excel/Spreadsheet that would require you to use a range of mathematical calculations. Learner should also create and manage cash flow projections/ Financial planning for the year ended 31 December 2021 and 2022. Assessor will provide you with the financial documents Appendix 1 and 2, so that learners will be able to carry out the task. Please provide the formula to get the mathematical calculations in the worksheet provided.
Cumulative cash flow= current year cash inflow- current year cash outflow
Ending balance=Cumulative cash flow+ Beginning cash balance
Question 3
a) Referring to Happy Auto Services case scenario, learner should conduct a roleplay with another learner lasting 30 minutes. Assessor to provide Happy Auto Services case scenario appendix 3 and 4 to learner. The role play should consist of the learner acting as the owner clarifying budget and financial plans, negotiate changes and disseminate information. Make notes during the role play and provide an outline of the discussion in the following format.
This activity will need to be observed by the assessor.
Instructions to Assessor
The learner should demonstrate that they can effectively communicate with relevant personnel and discuss/evaluate the outcomes of a budget and financial plan. They should demonstrate how they clarify budget and financial plans, negotiate changes and disseminate information.
When clarifying budget, learners should discuss the following:
Clarify budget and financial plans
Compare actual VS planned spending
Assess new income and expenses
Review financial goals
Modify budget to meet financial goals
Modify budget to meet organisational needs
Identify budget leaks
Review budget regularly
Capital Budgeting techniques
Breakeven analysis
When Negotiating changes, learners should discuss the following:
Negotiate changes
Top-down approach
Bottom-up approach
Negotiated budget approach
When discussing disseminating information, learner should discuss the following:
Disseminate information
Face-face meeting
Email
Telephone conference calls
b) At the end of the role play, learner should write a report on budget and expenditure according to company’s protocol. Please refer to Happy Auto Services case scenario for company’s policy and procedures. They should show the ability to prepare materials including drawing of tables which conveys detailed and factual content. Learners may need to use a range of digital technologies to access, compile and present this information
Question 4
Referring to Learner guide under topic 1.4 and answer questions 4a and 4b.
a) What is a financial contingency plan?
b) What is the difference between financial contingency plan and contingency plan?
c) Referring to case scenario (Happy Auto Services), prepare, implement, and modify financial contingency plans. Learners should use a mind map or template to organize and categorize the information. Learners should follow the steps in 1.4 on how to prepare contingency plans closely to demonstrate ability to complete the task.
Instructions to Assessor:
Assessor to provide guideline on how to prepare, implement and modify financial contingency plans. Learner should use demonstrate logical processes in planning, implementing and evaluating complex tasks and developing alternative strategies to achieve goals and timelines.
Performance Activity Checklist
This should be used by the trainer/assessor to document the learner’s performance as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Question 3 Presentation Task
1. in class Pre-Recorded 2. in class Pre-recorded exercise
The student is required to demonstrate ALL components from the list below Assessment Reassessment Comments
Date: Date:
Did the student:
Tick S NS S NS An assessor must record observations in sufficient detail to demonstrate their judgement of the student’s performance against the criteria
1 Support team members to access resources and systems to perform their required roles:
Actively participate in the roleplay with another learner acting as personnel (manager)
Use financial documentation to clarify outcomes of budget and financial plan
Discuss outcomes with the other learner
Identify changes that need to be made to the budget/financial plan
Discuss and negotiate changes with another learner
Discuss about disseminating information
Use positive communication skills and body language throughout the interaction
Speak clearly and professionally at all times
Actively listen to the other person’s views and support needs.
All task criteria must be satisfactorily demonstrated by the student. The task has been confirmed:
Satisfactory Not Satisfactory
This should be used by the trainer/assessor to document the learner’s knowledge as relevant to the unit activity. Indicate in the table below if the learner is deemed satisfactory (S) or not satisfactory (NS) for the activity or if reassessment is required.
Marking Checklist
Question 2: Did the learner demonstrate how to create and manage a budget and financial plan for one reporting period Yes No
(Please circle)
Question 3B: Did the learner demonstrate the ability evaluate budget and financial plan outcomes with required organisational personnel, and to negotiate any changes required to be made to budget and financial plans with required organisational personnel. Yes No
(Please circle)
Question 4A: Did the learner understand what is a financial contingency plan? Yes No
(Please circle)
Question 4B: Did the learner understand the difference between a financial contingency plan and contingency plan Yes No
(Please circle)
Question 4C: Did the learner demonstrate how to prepare, implement and modify financial contingency plans? Yes No
(Please circle)
Comments
Provide your comments here:
The learner’s performance was: Not yet satisfactory Satisfactory
Competency record to be completed by the assessor
This section should be completed by the trainer/assessor to document the overall outcomes of the learner’s assessments in Learners Workbook. The table below indicates whether the learner is deemed competent or not competent
Learner’s name
Assessor’s name
Unit of Competence
(Code and Title)
Date
Has the learner completed all required assessments in this workbook to a satisfactory standard? Yes No
(Please circle)
Comments from trainer/assessor:
Learner is deemed Not competent Competent
Assessor’s signature
Case Study A – Communicate details of agreed budget and financial plans to relevant team members
Joyful engineering company is a medium sized engineering firm with about 100 employees. Recently their management have come up with an agreed budget to reduce employees overtime wages from $200,000 to $150,000 per annum. The management wants to reach this target by limiting employee’s overtime hours to maximum 20 hours per week. Therefore, they will implement overtime sheet for employees to fill and account for their overtime hours. This overtime sheet will need to be signed by manager and hand to finance team at the end of each working week.
Please use the learner’s guide template in topic 2.1 to discuss with team members on disseminating details of agreed budget and financial plans to relevant team members.
For Example: Weekly Overtime Sheet
Company Name:
Employee Name:
Manager Name:
Week Start Date:
Date Task
Regular hours
Overtime hours
Breaks
Daily total hours
Weekly Total Hours:
Rate Per hour:
Total Weekly Pay:
Case Study B
Choco café is ordering chocolates to sell during Christmas season. The business has been ordering chocolate biscuits for the past few years and the supplier has launched a new product, white chocolate biscuits this year. Choco Café did a comparison of the two products.
Chocolate biscuit White chocolate biscuit
Gross Profit Margin 22% 25%
Nature of Product Made of chocolate
Packed in simple gold box
Can be stored at room temperature Made of white chocolate
Packed in a pretty box
Melts easily under room temperature
Customer preference This has been popular among choco café customers This is a new product that choco café has never sold. But its supplier has given the assurance that white chocolate is popular with customers of all age
Case Study C – Providing support
Sam is an employee who has worked for a debt collection company for two years.
Their performance has been declining over the past couple of months and has dropped to an unacceptable standard which is affecting the company’s performance figures. There have been recent technology changes and implementations in the workplace recently.
Unknown to you and the company, Sam has been feeling ignored in the workplace and has lost motivation for training and taking on new information.
Sam is doing what feels to be the bare minimum but has good and bad days. Sam is unaware that low performance has been noticed.
Case Study D
ABC Cooking Studio wants to spend more money on advertisement to increase their sales revenue. The company wants to achieve sales revenue of 180K and spend 50k on advertising for the first half of the year 2021. However, they are unsure of which advertising method would be most efficient to generate sales. Therefore, the finance staff created a budget plan to monitor advertising expenditure.
Advertising cost monthly breakdown
Jan
$ Feb
$ Mar
$ Apr
$ May
$ June
$
Projected Sales 30,000 30,000 30,000 30,000 30,000 30,000
Actual Sales 20,000 35,000 15,000 50,000 60,000 80,000
Less:
Internet marketing 3,000 0 4,000 1,000 2,000 3,000
Promotions 0 5,000 0 7,000 8,000 10,000
Case Study E
Star provision is a small convenience store near housing estate. It has been serving residents in the vicinity for the last five decades.
Please refer to the budget below to analyse variance between actual and budgeted finances.
Budgeted Actual Variance
Net Sales Revenue 200,000 226,650 26,650
Cost of sales 115,000 132,500 17,500
Gross profit 85,000 90,150 5,150
Case Study F
a)
Everest Pte Ltd sells batteries. The following information is extracted for the year ended 31 December 2020. The inventory as of 31 December 2019 is $15,000
Inventory $18,600
Net Sales Revenue $400,000
Cost of Sales $250,500
Evaluate Everest efficiency in inventory management against its competitor Energy. Given that Energy’s rate of inventory turnover and days sales in inventory are 18 times and 18.25 days respectively. Suggest one way to improve Everest efficiency in inventory Management.
b) Everest wants to improve its management of inventory and sell inventory faster by giving trade discounts to encourage its customers to buy more goods. The following information is extracted for the year ended 31 December 2021. The inventory as of 31 December 2020 is 18,600
Inventory 18,000
Net Sales Revenue 450,000
Cost of Sales 300,000
Evaluate Everest efficiency in inventory management against its competitor Energy. Given that Energy’s rate of inventory turnover and days sales in inventory are 19 times and 18 days respectively.
Appendix 1
Annual Profit for 2019 and 2020
Company Name: Happy Auto Services
2019
$ 2020
$
Sales income 500,000 600,000
Other income 100,000 150,000
Total 600,000 750,000
Less:
Cost of goods sold 75,000 110,000
Storefront rent expense 50,000 50,000
Advertising costs 5,000 15,000
Sales staff salaries 100,000 100,000
Sales staff overtime 50,000 57,000
Administrative Staff Salaries 40,000 40,000
Repair and maintenance 5,000 10,000
Office expenses 5,000 7,000
Audit fees 5,000 5,000
Utilities 5,000 8,000
Insurance 5,000 5,000
Earnings before interest and taxes 255,000 343,000
Less: Tax 70,125 92,610
Profit for the year 184,875 250,390
Appendix 2
Actual Profit for the period ended 31 March 2021
31 March 2021
$
Sale income 125,000
Other income 47,500
Total 172,500
Less:
Cost of goods sold 23,000
Storefront rent expense 12,500
Advertising costs 5,000
Sales staff salaries 25,000
Sales staff overtime 15,000
Administrative Staff Salaries 10,000
Repair and maintenance 4,000
Office expenses 2,000
Audit fees 1,250
Utilities 2,000
Insurance 1,250
Earnings before interest and taxes 71,500
Less: Tax 19,662.5
Profit for the year 51,837.5
Notes:
Based on discussion with management, the projected sales for 2021 will increase by 20% due to increase in customer’s satisfaction and introduction of new one-stop service for customers.
Management plan to add a new workshop in January 2022 and the renovation will start and complete by 2021. There will be a one-time expenditure of $200,000 for the renovation of the new workshop.
The beginning cash flow for 2019 is $150,000 and should be use to calculate cash flow projections.
In 2022
With an additional of a new workshop in January 2022, management will start to renovate in October 2021, management predicted that sales for 2022 will increase by at least 50%
The rent for new store front rent is $60,000
There will be additional hire of two sales staff amounting to fixed salary of $100,000 per annum
There will be additional hire of one administrative staff for the new workshop with salary amounting to $40,000 per annum
There will be additional cost for both audit and insurance amounting to $5,000
Use the minimum threshold projected sales of 15% to do breakeven analysis. This sales level is low enough to be reasonably attainable with two workshops for 2022.
Appendix 3
Budget Plan for the period ended 31 March 2021
Projected Actual Variance
Sale income 180,000 125,000 (55,000)
Other income 45,000 47,500 2,500
Total 225,000 172,500 (52,500)
Less:
Cost of goods sold 33,000 23,000 (10,000)
Storefront rent expense 12,500 12,500 –
Advertising costs 4,500 5,000 500
Sales staff salaries 25,000 25,000 –
Sales staff overtime 17,100 15,000 (2,100)
Administrative Staff Salaries 10,000 10,000 –
Repair and maintenance 3,000 4,000 1,000
Office expenses 2,100 2,000 (100)
Audit Fee 1,250 1,250 –
Utilities 2,400 2,000 (400)
Insurance 1,250 1,250 –
Earnings before interest and tax 112,900 71,500 (41,400)
Less: Tax 31,047.5 19,662.5 (11,385)
Profit for the year 81,852.5 51,837.5 (30,015)
Appendix 4- Cash flow Projections for 2021 and 2022
2019 2020 2021 2022
Service Revenue 500,000 600,000 720,000 1,080,000
Other Income 100,000 150,000 180,000 270,000
Total 600,000 750,000 900,000 1,350,000
Less:
Cost of goods sold 75,000 110,000 132,000 198,000
Rent expense 50,000 50,000 50,000 110,000
Advertising costs 5,000 15,000 18,000 27,000
Staff Salaries 100,000 100,000 100,000 200,000
Staff Overtime 50,000 57,000 68,400 102,600
Administrative Staff Salaries 40,000 40,000 40,000 80,000
Repair and Maintenance 5,000 10,000 12,000 18,000
Office Expenses 5,000 7,000 8,400 12,600
Audit Fee 5,000 5,000 5,000 10,000
Utilities 5,000 8,000 9,600 14,400
Insurance 5,000 5,000 5,000 10,000
Profit and loss before tax 255,000 343,000 451,600 567,400
less: tax 70,125 94,325 124,190 156,035
Profit for the year 184,875 248,675 327,410 411,365
Less: Renovation cost for new workshop 200,000
Cumulative Cash Flow 184,875 248,675 127,410 411,365
Beginning Cash Flow 150,000 334,875 583,550 710,960
Ending Cash Balance 334,875 583,550 710,960 1,122,325
