Accounts and Finance: Assignment

Running head: ACCOUNTS AND FINANCE
Accounts and Finance
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTS AND FINANCE
Table of Contents
Introduction:....................................................................................................................................2
1. Objectives of preparing budget for Sky Café:.............................................................................2
2. Revenue and spending variance of Sky Café for the month of July:...........................................3
3. Identification of those activities of variances having management concerns:.............................5
4. Recommendation to Sky Café for supporting its objectives:......................................................7
Conclusion:......................................................................................................................................7
References:......................................................................................................................................9

2ACCOUNTS AND FINANCE
Introduction:
All business organisations aim to achieve success, competitive advantage, low costs,
increased revenues, long-term customer loyalty, greater earnings per share and increased market
value. For accomplishing the above-stated objectives, it is necessary to plan out the objectives in
an optimal way by considering plans like budgets. In business environment, a budget is
considered as a plan for the outgoing expenses and incoming revenues for an organisation for a
particular timeframe (Arnaboldi, Lapsley and Steccolini 2015). The main reason for preparing
budgets is to forecast the future outcomes after considering the likely changes to take place in the
upcoming years. Thus, annual budgets are the most widely used mechanism in order to control
expenditure and establish related performance targets. This paper would intend to explore the
objectives of preparing budget for Sky Café along with finding out budgetary variances by
highlighting on those areas that are of significant concern to the management. Finally, after
identification of such variances, recommendations have been provided to the organisation for
supporting its objectives.
1. Objectives of preparing budget for Sky Café:
Sky Café is an organisation, which is involved in preparing meals for its tourists and
citizens near the airport. Therefore, it is necessary for the management of the organisation to
prepare budget by keeping in mind the following set of objectives:
The budget planning process would assist the management of Sky Café in identifying and
reviewing the effect on the cash flows, balance sheet and inventory planning of the

3ACCOUNTS AND FINANCE
organisation. Moreover, it would assist the organisation in assessing its financial position
and borrowing needs from the market (Bedford 2015).
Another objective of preparing budget for Sky Café is that it allows the apportionment of
financial resources towards an important strategic plan developed by the management.
The management could only consider the task of accomplishing the particular identified
target after resource allocation.
With the help of budget, the organisational management could respond effectively to the
market conditions for tracking quickly the process of goal accomplishment (Bedford,
Malmi and Sandelin 2016). The identification of risks would assist Sky Café in
implementing measures, which would result in minimisation of financial risk.
Finally, with the help of a financial plan like budget, the management of Sky Café could
identify risk and return. It assists in the identification of gap between financing plans and
investment (Chenhall and Moers 2015). For instance, at the time of preparing budget, Sky
Café would be able to apportion resources as well as inventory for fulfilling the customer
demands adequately. These resources could be both short-term and long-term.
2. Revenue and spending variance of Sky Café for the month of July:
The revenue and spending variance of Sky Cafe for the month of July is presented briefly
in the form of a table as follows:
Particulars Details Budget Actual Variance Comments
Budgeted meals
quantity A 18,000 17,800 200 Unfavourable
Revenues B £ 81,000 £ 80,100 £ 900 Unfavourable
Expenses:
Raw material C £ 43,200 £ 42,720 £ 480 Favourable