BSBFIM601 Financial Planning: Budgeting, Variance Analysis & Reporting

This report provides a comprehensive financial analysis focusing on budgeting, variance analysis, and financial forecasting. It includes an assessment of sales forecasts, expense estimations, and profit projections. The report analyzes discrepancies between budgeted and actual figures, highlighting variances in sales, purchases, and expenses. It evaluates the effectiveness of budgeting techniques and recommends improvements for future financial planning. Key findings include favorable variances indicating positive financial performance and suggestions for optimizing resource utilization and supplier evaluation. The document also features creditor and debtor statements along with asset and expense breakdowns, offering a holistic view of the company's financial standing. Desklib offers a range of similar documents and solved assignments to aid students in their studies.

BSBFIM601
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Table of Contents
Assessment 1...................................................................................................................................3
Part A..........................................................................................................................................3
Part B..........................................................................................................................................6
Assessment 2...................................................................................................................................7
Introduction................................................................................................................................7
The effectiveness of the budgeting technique..........................................................................9
Recommendations....................................................................................................................10
Conclusion................................................................................................................................10
Assessment 3.................................................................................................................................11
Introduction..............................................................................................................................11
Recommendation:....................................................................................................................19
Conclusion:...............................................................................................................................19
References.....................................................................................................................................20
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Assessment 1
Part A
Sale Forecast
Particulars
Amount
($)
Sales for 2014 1428833
Decrease in sales@
3% 42864.99
sales for 2015 1385968.01
Estimated Expense
Particulars
Amount
($)
Expense for 2014 626279.2
Decrease for 2015 47000
Expense for 2015 579279.2
Estimated Purchase
Particulars
Amount
($)
purchase for 2014 599850
Increase 29992.5
Purchase for 2015 629842.5
Estimated Profits
Particulars
Amount
($)
sales for 2015 1385968.01
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Expense for 2015 579279.2
Purchase for 2015 629842.5
Profits 176846.31
Working Note:-
Creditors Statement
Creditors 1-Oct-
14 Oct
October
(payment
)
Nov
Nov
(Payment
)
Dec
Dec
(Payment
)
Balance on
31 dec
2014
JRL 22626 1050 5000 1050 5000 1050 10000 5776
Innovating 3653 380 2000 380 2000 380 4000 -3207
LMS
marketing 1200 0 0 0 1200 0 0 0
Rowlings and
son 35622 220 5000 220 5000 220 8600 17682
Total 63101 1650 12000 1650 13200 1650 22600 20251
Debtors Statement
Debtors 1-Oct-
14 Oct Nov Dec
Balance
on 31
dec 2014
TTNT 0 0 336 0 336
PL farthings 1323 300 200 965 2788
J smith and co 800 150 350 0 1300
LL
incorporated 356 362 462 332 1512
National
appliances
direct
4233 600 490 695 6018
Total 6712 1412 1838 1992 11954
Assets Statement
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Assets: 1-Oct-14 Octobe
r
Novembe
r
Decembe
r
Balance on
31 dec
2014
Cash at bank 245000 33864.9 30058.93 34857.93 343781.79
Computer 16400 0 0 0 16400
Van 26000 0 0 0 26000
Phone [phone]
Office
equipment 4500 0 0 0 4500
Debtor 13580 1412 1838 1992 18822
Stock 117303 46071 76226 78525 318125
Expenses Statement
Expenses
1-Oct-
14
Octobe
r
Novembe
r
Decembe
r
Balance on
31 dec
2014
Phone [phone]
Electricity 1590 132.5 132.5 132.5 1987.5
Gas 600 50 50 50 750
Water 550 45.83 45.83 45.83 687.49
Insurance 1300 108.33 106.33 108.33 1622.99
Payroll 465000 38750 38750 38750 581250
Cleaning 850 70.83 70.83 70.83 1062.49
Finance cost 1650 137.5 137.5 137.5 2062.5
Advertisement 560 46.67 46.67 46.67 700.01
Rent 25000 2083.33 2083.33 2083.33 31249.99
Petrol 560 46.67 46.67 46.67 700.01
Accountant Charges 370 30.83 30.83 30.83 462.49
Maintenance 1405 117.08 117.08 117.08 1756.24
Bank fees 210 17.5 17.5 17.5 262.5
Office supply 600 50 50 50 750
Total 626279.21
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Part B
Role Play
Me – How are you sir??
Finance Specialist – I am fine thank you. What about you??
Me – I am fine to sir. The budget for the year has been prepared to keep in view various factors
and trends along with customer preferences.
Finance Specialist – What was the procedure undertaken to prepare this budget and also to
ensure that this is effective and efficient?
Me – The budget are prepared for various analysis and deep knowledge so that the best results
can be generated and minimum variances are there. The budget is very much important and we
understand that therefore there have been studies of each and every aspect that are surrounding
the organisation to have best results after the preparation of the budget. The budget is prepared
with utmost care keeping in view the achievement of goals and objectives of the company.
Finance Specialist – Ok Good. Can you tell me about the process of monitoring that will be
conducted?
Me – There will be a regular analysis of the results that are being achieved by the organisation
and then a comparison of the same with the standards that are being set.
Finance Specialist – What will be the action plan for the unfavorable results??
Me – There are always chances of the variation as the budgets are made on the basis of
assumptions. Though, it is important that the variations are not much as compare to the actual
results as it can question the reliability of the data. In case of the unfavorable results, the action
plan would be to analyse why the variation is there or what changes have led to this situation and
then overcome them and reframe the budget effectively and efficiently.
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Assessment 2
Introduction
In the business, there are budgets which are made so that all the activities can be controlled and
performed in such manner by which all the targets will be achieved. Then it will be required that
they are compared with the actuals so that deviations can be determined and for this variance
analysis will be used. That will be discussed in this report in context with Big Ed’s whitegoods
Limited.
Preparation of variance analysis
Variance analysis is carried out so that all the deviations which are present will be identified and
on the basis of that performance will be evaluated which will help in decision making. Under
this, all the budgeted figures which are estimated by the company in relation to the coming
period will have to be compared with the results which have been attained in the actual terms. By
this, the performance aspects will be checked and it will be identified that whether the company
is able to work in the manner by which it will be able to gain the maximum of the advantages.
Same is provided below:
particulars Budgeted
amount
Actual
amount
variance
Total sales 1385968.01 1623000 -237032
Total purchase 629842.5 701400 -71558
Total expense 579279.2 402000 177279
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Major differences
From the analysis which is carried out above it can be noted that there are differences which are
present. The highest deviation is present in case of sales in which the amount which fluctuates is
237032 and then a decline of 177279 has been noted in respect of expenses by Ed’s white goods.
In respect of the purchase, the variance is amounting to 71558. All of these variances are in the
favor of the company and by these only profits will be made by it which will be beneficial for the
company in the long run.
Discrepancies
The discrepancy has been noted in case of all the purchases, sales and expenses which have been
made. The deviations which are noted are in a positive aspect and there will be positive impact
which will be gained by the company due to them. This is because the sales have noted as in
increase from the amount which has been budgeted and this is good for the business as it is
growing which shows that company is moving forward and expanding its scope. Then the
purchases are also rising which is also good as more the purchase more will be the sales which
will be made. There is the decline which is present in case of expense and by that the overall
reduction in cost is noted and all of these factors are favorable for the company.
The main reasons because of which these discrepancies are occurring are as follows:
• In the making of the budget it has been noted that there will be decline which will be
faced in respect of sales but in actual the situation was reversed and the company has
experienced a growth in the value of sales which lead to the variance. This was the positive
change which has taken place and this will be beneficial for the company as it denoted that the
company is able to meet the needs of the customers as this is the only case in which company is
able to increase the value of sales.
• The decline which has been assumed in terms of expenses was only in relation to wages
but the actual decline is a lot more than that amount which is another cause. By this, the total
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expenses or cost of the company has declined and this is the reason for the increase in the profits
also.
• This may have been due to the increase which has been made in sales price by which
overall increase is made in sales.
• The company has ensured that all the resources are used in an appropriate manner so that
rise in efficiency took place and lead to positive development by reducing the expense.
• The proper training facilities have been provided and by that labor productivity increased
and also proper management has been established in the business.
The effectiveness of the budgeting technique
In the company, budgets have been used as the planning tool in which estimates in respect of all
the values in the business have been made. By that, the standards are set which will have to be
attained. It can be seen that this has proved to be very effective in the given case for Whitegoods
as there are favorable variances which have been identified. The tool variance analysis has been
taken into consideration for this purpose. By the use of this company is able to know the entire
aspects on which there are chances of the deviations and then the reasons for which this
happening is also identified. In the present scenario, they are derived in such manner that they
are positive and will be in the overall interest of the business. There is no adverse impact which
will be made by the variances which are determined and so it can be said that there is proper and
effective functioning and the work is carried out in such manner by which all the targets which
have been set in the budgets have been attained. The budget which has been made by the
company has been prepared by taking into consideration all the main assumptions and increase
or decrease which may take place in future. Due to this, there were the positive results which are
obtained. By all this discussion it can be said that cost budgeting technique which has been used
by the company is very effective as the cost has declined and sales have risen.
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Recommendations
The variances have been identified in the budgets and this can be seen in the above part of the
report. All the variances are favorable and this is for the benefit of the company. There is always
a scope in all the business in which more improvements can be made. As in the given case
company has made the process such by which the purchase cost of the material can be declined.
By this, the total increase which is noted in terms of the purchase will also be reduced and this
will lead further increase in the profits which are made. For this such steps will be taken by
which the quantity which will be required can be decreased and this can be attained by hiring
such labors that will be able to utilize the inventory in a better manner. Also, the company will
have to make proper evaluation of all the suppliers who are there and the one who will be
providing the company with the material at least cost. All of these will have to be considered by
the company in the making of the next budget and all the values which will be estimated will be
made in such manner that they set more specific targets and so the working will be made
accordingly and the deviations will be reduced. Then the proper check and control system will
have to be established by the company so that there is no fault which is made in the carrying out
of the process and following budget.
Conclusion
From the report which is provided above, it can be said that company is using variance analysis
and with the help of this all the variances have been identified. There have been positive points
which are noted and by that it can be said that there is an overall development which is taking
place in the company. All the processes are undertaken in the best manner and that is the reason
that favorable deviations are determined.
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Assessment 3
Introduction
The major aim of preparing this report is to figure out the availability of financial management
software for business appropriateness and effectiveness in actual and budgeted business. It will
also include a reliable recommendation about the suitability of one of the financial software. This
report will also provide information related to usability, characteristics, and compatibility of
software.
Financial management software:
Financial management software is used for managing whole managing procedures from
beginning to the end. Authorisation of management financial software includes maintenance of
account receivable, payroll, cash flow, funding and big purchases in order to understand the
requirement. Example of financial management software is Mint, Quick books, wave; Quicken
and so on for monitoring individual and general wealth for projected an actual business.
1. Personal Capital:
Personal capital is basically used to analyse cash flow and funds requirements. It is used to create
budgeting plan in order to track real-time financial activity. It is also known as cash flow
analyzer tool which is utilised in taking investment decision with advanced capabilities. It is
totally good or those companies who need to analyse advance observation from zero in no
problem financial areas (Eisner, et. al., 2018).
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(Source: Schwab, 2015).
Characteristics:
1. Personal Capital allows the company to stay on the path and make stable and effective
decision on a subject of managing the budget, payment of bills, meeting financial goals.
2. This financial software is utilised to make easy payments, tracking payment criteria, pending
transactions, managing past pay information (Boucher, et. al., 2015).
3. It is easy to sign-up, understands and east to utilise. Only verification id is needed to track
whole accounting process from PC's or from cell phones.
Device compatibility:
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