BSBFIM601 Manage Finances - Project 1 | Desklib

This report covers the budget preparation for a shoe manufacturing company named Ronexo Shoe. It includes the description of the business, data used to inform the budget, involvement of stakeholders, budget for the next financial year, and more. The report also explains how the budget contributes to financial management and analyzes the existing financial management approaches of the organization.

ADV DIPLOMA OF LEADERSHIP & MANAGEMENT
BSBFIM601 - MANAGE FINANCES
Project 1
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Scenario
Summative assessment 2
Project 1
 This is a series of practical and theory activities that will enable you to demonstrate skill and knowledge—and produce end
products suitable for use in the work place.
Evidence collected as a result of workplace observation will support this assessment.
Address each of these:
For the business in which you work you need to prepare a budget. The budget must align with the business plan.
1. Describe the business and its core operations.
2. Explain what data you would use to inform the budget and why this data would be relevant.
3. Who else would you involve in developing the budget?
4. Draw up the budget to cover the next financial year.
5. Explain how the budget would be used to monitor the financial performance of the organisation.
6. List and explain the application of statutory and legislative requirements as they apply to financial management within a
business organisation.
7. Write a report explaining how the budget that you have developed contributes to financial management.
8. Present this report verbally in order to demonstrate your communication skills as well as the ability to explain budgets
and deal with questions.
9. Analyse the existing financial management approaches of the organisation. Are there any recommendations you should
make and what are they?
10. What software packages/ programs have you used when developing the budget and how did these assist?
Submit:
1. the budget—with appropriate explanations about its implementation
2. answers to the questions
3. the report on how the budget contributes to financial management
4. the report on how effective current financial management approaches are
If you are not working develop a scenario for an imaginary business. Describe the business and what it does then address the
assessment project questions. The business could be a private or a not-for-profit organisation.
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Contents
Describe the business and its core operations......................................................4
Explain what data you would use to inform the budget and why this data would be
relevant.................................................................................................................5
Who else would you involve in developing the budget?........................................5
Draw up the budget to cover the next financial year............................................5
Explain how the budget would be used to monitor the financial performance of the
organisation...........................................................................................................6
List and explain the application of statutory and legislative requirements as they apply to
financial management within a business organisation..........................................7
Write a report explaining how the budget that you have developed contributes to
financial management...........................................................................................8
Analyse the existing financial management approaches of the organisation. Are there
any recommendations you should make and what are they?...............................8
What software packages/ programs have you used when developing the budget and how
did these assist?....................................................................................................9
Conclusion.............................................................................................................10
References.............................................................................................................11
BSBFIM601 Manage finances
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Introduction
BSBFIM601 Manage finances
Financial Management helps in planning, organizing and controlling of the monetary activities. It takes
care of the utilization of resources in the effective and efficient way. A budget is a financial plan that estimated
the future expenses and predicts the sales of the goods and services. A business operates by the help of many
departments which run the business (Nikulina, 2019). In this report, a shoe manufacturing company has been
taken named Ronexo Shoe which was establishes in the year 2021. The budget has been prepared for the
company considering the estimated direct and indirect expenses and the net profit for the organization. The
importance of financial performance and the contribution of financial management in budgeting has also been
mentioned in the report.
Describe the business and its core operations.
Business is the procedure of various stages for accomplishment of pre-determined goals & objectives to
achieve general and organizational desires. Ronexo is the shoe manufacturing newly startup company
established by Mr Gary in 2021 for the purpose of establishing its different zone in the nation (the balance small
business, 2021). The enterprise must have include five activities of basic requirements:
 Marketing & Sales: The most affectionate & critical task for the Ronexo is to promote & attract
maximum people in relevance to demand & supply of products and services in earlier stage. They have
to create the budget. Who else would you involve in developing the budget? And awareness and loyalty
to take over stability in marketplace.
 Designing & Manufacturing: Ronexo company also wants sustainability and effective utilization of
resources in their production for the future growth. It is possible only when the quality-products has
been produced & served in the market. This gives major satisfaction to the consumers and beneficiary
terms to the firm.
 Technology: It is containing the adaptability of updated techniques which presents the new way of
working, innovative ideas and more capacity of doing job-order to achieve the client's attention. Ronexo,
as a startup manufacturing has a special benefit that they have newly launched tools for the making of
design and final product.
 Human Resources: It is defining the management of proper utilities in workforce of the company.
Ronexo manufacturers only select and trained those people whom they find relatable skills and talents of
doing job in effective manner.
 Finance: It is the key role for the Ronexo firm because as a new company, it has to manage funds and
investment at huge level with high risk which is used in every department for the proper functioning of
activities. It includes the financial budgets, banking operations, risk-return policies and vary
fundamentals.
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Explain what data you would use to inform the budget and why this data would be
relevant.
The data that would be useful for preparing the budget is: Revenue, Direct Material, Labor and
Overhead, Gross Profit, Selling, Distribution, Legal and Administration Expenses.
It is important to give an estimate of the sales and the profitability of the business. Revenue is an very
essential part of the business (Ostaev, and et.al., 2019). It manages to allocate the resources efficiently and
save the time and effort. It helps in meeting the objectives and achieve the goals of the organization. The
direct expense mentions the costs directly related to the business and helps in taking the important pricing
decisions. The Selling and distribution budget are essential because it forecasts the cost of sales and can
vary with the expected sales. The legal expenses are necessary because it predicts and protects from the
future legal issues. Net Profit helps in estimating the profit from its sales.
Who else would you involve in developing the budget?
While development the financial budget for the newly launched enterprise – Ronexo shoe
manufacturers. As a manager of this new entrants in the market place, the inclusion in decision making
procedure has to involved some of the important facets of the organization which are as follows:
1. Top Executives and Management: The Ronexo team is also facilitating the involvement of its topmost
administration while taking some decisions and make out budgetary sheets. They are more focused in
maintaining the monetary fund for the organization. Because at the end, these statements are presenting
the actual earnings or expenses and the stability of comprehensive percentage range.
2. Shareholders & Stakeholders: These two structure are the main bodies for any concern as well as for
the Ronexo business enterprise. Because one of the member known as shareholder invested their capital
in the house and the another one has to utilize this investment in proper, effective and adequate manner
to achieve the maximum productivity of shoes at low cost. And earn maximum profits for everyone's
beneficiary purpose.
Draw up the budget to cover the next financial year.
Budget prepared for the fiscal year 2021 to estimate the profit and revenue of the company.
Budget of Ronexo Shoe for the Financial Year 2021
Particulars Budget ($)
Production Units 500
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Revenue 100 per unit
(a) Total Sales $50000
Less: Direct Material $7500
Direct Labour $3000
Direct Overheads $2500
(b) Cost of Goods Sold $13000
(c) Gross Profit (a-b) $37000
Selling and Distribution Expenses 2000
Legal Expenses 500
Administration Expenses 2500
(d) Total Expenses 5000
Net Profit (c-d) $32000
Explain how the budget would be used to monitor the financial performance of the
organisation.
Budget is the financial action plan. It is a part of the annual cycle of the business. One thing which is
certain in the shoe manufacturing business is that the customer's attract by the new designs and trends of the
product. It makes sure that the revenue will increase (investopedia, 2021). In setting up the business, the cost
incurred depends on the production of units and the variable expenses. The following points measures the
monetary performance of the organization:
1. Controls costs: Budget is the key factor of arranging the expenses according to the revenue to keep the
business successful. Having data of each year helps in analyzing the performance of the Ronexo Shoes.
It effectively manages the financial resources and increases monetary performance of the business. It
entails the financial planning, performance budgets and evaluation to achieve the financial goal of the
company.
2. Helps in finding the variances: The budget helps in determining the variability of the standard and
actual costs and indicated the financial performance of the Ronexo Shoes. It also assists in the monetary
analysis of the future expenses and adjusts the production and sales according to it.
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List and explain the application of statutory and legislative requirements as they
apply to financial management within a business organisation.
Ronexo company has been involving in the country's legislature or legal activities with inclusion of
financial reporting which means all type of laws, rules and regulations involved in the fiscal structure of the
company. It simply carried out overall necessities, permissions, licensing with internal as well as external
resources (Lima and et.al.,2017). As a new entrants in the market, the company should be following all these
fundamental required things:
1. The directors, top management and other executives of the company should be accountable for the
effective administration and proper fundamental structure. So that, it can be presentable to the
government in the ending period.
2. In regards with the showcase of per-determined reporting, top-executives have all responsibility in
inclusion for occurrence of any kind of extra expenses, earnings and other investments should be
adjusted time-to-time without delay.
3. The directors and top-executors should have maintained all departments or branches key functional
areas such as financing, marketing & sales, production, human resource information system and
technological aspects of the corporation for the balance in the system.
4. Managers of Ronexo Private Limited also having necessities of making functional regulations for the
workers and employees working over there. These rules and responsibility should be included some
points like Daily reporting check-list, target based task-order, idle and over time management,
observational and consultation policies etc. which provides the actual positioning of the individual
people towards the company with proper documentation records.
5. Employees are the main assets of the company. They should have maintained some criteria regarding the
specific rights, equality and proper feedback policies from the managers, or other uppermost level.
Ronexo company also having employee or workers union so that they have also maintained their unity
every time for the coverage of the any negative effect.
6. Ronexo company also getting entrance by permissions, regulations, registration, licensing and other
factors which have become the governance major participation in the company structure to perform
legally in nature. Because at the end, they are also having the tax-legitimate industry in the nation and
paying out all the taxation amounting on time.
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→ These all legislative performance in regards with financial management have applied with the Ronexo shoe
limited for the effective & efficient running of the business in the external field.
Write a report explaining how the budget that you have developed contributes to
financial management.
Budget is a projection of the income and the expenditures of the business of the year. It requires the
control and evaluation to insure that the company's finances are managed properly (Kenno, and Sainty, 2017).
Budget that have been made above contributes to the financial management in the following ways:
1. Proper Planning and implementation: It gives the idea of the goals that can be achieved by the company
and according the budget is prepared for the next financial year. It forecasts the revenue and income that
could be achieved in the future period. It represents the financial position of the Ronexo Shoe.
2. Performance Evaluation: Budget gives an estimation of expenses in advance which helps in taking the
financial decisions. It gives an insight of the financial performance and helps in the taking crucial
decisions.
Analyse the existing financial management approaches of the organisation. Are
there any recommendations you should make and what are they?
Some of the financial management approaches are:
1. Traditional approach
2. Modern Approach
3. Liquidity and Profitability approach
In this report Ronexo Shoe Company has used the Modern aprroach for managing the finances of the
organization. This approach takes on the competition, mergers, quality improvement and the financial
disciplines. It helps in maintaining the sustainability of the enterprise, by solving the financial problems in
advance by the help of the budget (indeed, 2021). It analyses the total funds of the firm and the assets which
needs to be acquired. The approach helps in taking the decisions related to
• Financial Decisions: The objective is to maximize the value of the investments made. It helps in
meeting the financial objectives and maintaining the working capital. It helps in taking the decisions
regarding the monetary benefits and hedges the risk of the company. It also determines the fund
requirement and the way of raising the funds through the issuing of shares.
• Investment decisions: These helps in the decision related to the scarcity of resources. The funds related
to the purchase or lease of the machinery requirement for the set of the manufacturing unit (Cuganesan,
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2017). It helps in the ascertainment of the volume of funds needed and the select of the capital
proposals. It also measure the uncertainty in the investment proposals.
Recommendations:
1. Have a clear business plan: Before taking any financial management approach into consideration, the
owner should have a crisp and precise business plan which would help in making the budget and sorting
the marketing strategies.
2. Meeting the taxation decisions: The judgments related to the tax should be taken on the right time and
the tax should be deducted from the profit
3. Assessment and Recovery Plan: The recovery plan should always be ready in case of any contingency
to the company.
What software packages/ programs have you used when developing the budget and
how did these assist?
Ronexo shoe manufacturing enterprises have been using SAP software packaging for the analysis of the
budgeting requirements. SAP – system, applications and products. This helps firm's data management of
complex processing into easiest medium of sources to applicable in present-time insight (SAP user assistance,
2021). It is the streamline key physical process to earn the great experimentation in the organization.
The system have engagement of fundamental assistance with different scenarios :
1. Financing & accountancy: This software have more influential power towards online platform data
entry system. It automatically assists and manages financial activity of the Ronexo company. Concisely,
it has consumed less timing in manuality & made informative decisions.
2. Distribution & Inventory: It has inclusion of the Ronexo's raw materials, work-in-progress and final
products data management in the formative manner for the easiable analysis of the stock-measurement,
supply chain inside & outside the organization and transferable goods stocking in proper way.
3. Purchase & Operations: The SAP shows the Ronexo's purchasing power and operative analysis with
pay-order assignment, receipts, payments and proper invoicing with the particular management of the
workings.
4. Sales and CRM: In this scenario, the company has the specific part of selling power position and
consumers valuable feedback & review component in the segment.
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5. Analytics and Reporting: This is the most important section for the new entrants firm- Ronexo.
This analysis and coverage has the power to gain knowledge about the accurate status of the company in
compare to other competitors.
Conclusion
From the above budgeting structure, it is concluded that the Ronexo company should maintain their
flexibility and innovativeness in compete with the other competitors to maintain the stability and growth within
the short time period to overcome of the fear of the new entrance in the marketplace. The company prepared a
standardized budget to check the quarterly, monthly, semi-annually and yearly budgeting standards with the
help of specific software of SAP to manage and keep tracing the whole information system.
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References
SmallPRINT V3 Sep 2015
http://ccb.elearninglogin.com/t/dashboardinvestopedia, 2021
Cuganesan, S., 2017. The design of performance budgeting processes and managerial accountability
relationships. Public management review.19(7). pp. 954-971.
Kenno, S.A. and Sainty, B., 2017. Revising the budgeting model: challenges of implementation at a university.
Journal of applied accounting research.
Lima, A.C.,and et.al.,2017. A qualitative analysis of capital budgeting in cotton ginning plants. Qualitative
Research in Accounting & Management.
Nikulina, S.N., 2019. Innovative Direction of the Budgeting System Development. In Paper Materials of the 1st
China and CIS Countries Scientific Readings" Urbaniza-tion Level, Rural Labor Transfer and Economic
Growth in the XXI-st Century: Economic Models, New Technologies, Management & Marketing Practices and
Mutual Collaboration". (pp. 404-418).
Ostaev, G.Y., and et.al., 2019. Strategic budgeting in the accounting and management system of agricultural
enterprises. Indo American Journal of Pharmaceutical Sciences. 6(4). pp.8180-8186.
Online References
the balance small business,2021 [online] Available Through <https://www.thebalancesmb.com/business-budget-
2948312>
indeed, 2021 [online] Available Through <https://www.indeed.com/hire/c/info/budget-management>
investopedia, 2021 [online] Available Through <https://www.investopedia.com/terms/p/performance-
budget.asp>
SAP user assistance, 2021 [online] Available Through
<https://help.sap.com/doc/b6f2cc53a8b77214e10000000a174cb4/1610%20002/en-US/frameset.htm?
53e8cc53a8b77214e10000000a174cb4.html>
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