Importance of Budget for Twin River Cafe

This report discusses the importance of budget for Twin River Cafe, including the objectives of budget preparation and the report of company revenue and spending variance for July. It also highlights the activities of variance that should be concerned to management and provides advice on what the cafe needs to do to support their objectives.

Finance.

Executive summary
Finance is usually managed by the Finance manager for improving their overall business
financial performance. In that manner, the current report is based on the Twin river cafe which
for planning allocation of budget in effective manner. The report describe a importance of budget
such that it helps to improve the overall structure and due to low sales which is highlight the
expenses the budget planning. The most of the outcomes reflects adverse. The report has shows
the concerns such that fixed expenses incorrectly forwarded and sales are lower than. For
improve here is also included recommendations for company to improve those impact. Through
that cafe is able to sustain its objectives effectively.

Table of Contents
Executive summary..........................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
A) What are the objectives of preparing a budget for Twin River cafe......................................4
B) Report of company revenue and spending variance for July.................................................5
C) Activity of Variance should be concerned to management...................................................6
D) Advise to cafe on what need to do to support their objectives..............................................7
CONCLUSION ...............................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance management is make focus on ratio, equities and debts. It is very useful for
portfolio management and distribution of dividend. This creates importance for business to get
proper planning for company. The present report is based on “Twin River Cafe” which is
company which prepare meals for tourists located next to the local airport. The report will shows
a objective of budget for cafe and produce report of company revenue and spending variance for
July. This will mention activity of variance which should be concerns to management. This will
also advise to cafe which support to objectives.
MAIN BODY
A) What are the objectives of preparing a budget for Twin River cafe.
A budget is an estimation of revenue and expenses over a specified future period and it is
usually complied and re-evaluate on a specific work and finance. This is very important and
effective for company in order to know its actual expenses or another funds. In order to prepare
budget company have various objectives which are helpful for managed those funds in an
effective manner (Fais and et.al., 2016). The main objective of budget to undertake the
production of these goods and services. Another objectives of budget preparation are reallocation
of resources, reduce inequalities in income and wealth, management of fund allocation. The
Twin river cafe is prepare meals for tourists and local citizen in their kitchen. The main objective
of company is to grow independently by managing budget and expenses. Here is described
various objectives which are important for cafe which are as follows: Predict cash flows: Budget is very important and effective part of company who are
rapidly growing at market place and for them it is very difficult to measures cash in
proper manner. For that company is uses budget because it is help to determine the cash
flow and generate the best result for the future. In this way River cafe had to use budget
for allocating funds in order to develop further projects. Review the results and performance evaluation: The budget is helpful for manage and
determine result of work and allocation of tasks (Faleiros and et.al., 2016). With the help
of budget, river cafe is able to reach objectives and further tasks.
 Allocation of resources: In order to run business in effective manner here is need capital
for purchases goods and services. The budget is allocated so that it is provided the
detailed information of outflows and inflows of money for a particular year. Thus,

through the valid and effective objective company need to develop budget for deciding
allocation of funds for the different activities.
B) Report of company revenue and spending variance for July.
As per the mention that budget for River cafe has allocated which is 18000 for July and
revenue up to 81000. On the other side, the planned expenses for July is 66180 in the same time
and net operating income which is 14820. In that way, it is very important and effective for
manager to make sure about the budget should be prepared and communicate properly with
senior manager and top-level authority. For that here is prepared Budget for Twin River cafe
which is important for monitored by management are as follows:
The above mentioned budget is analysed that the proper expenses and incomes of
company. There is a reduction in the values of sales then it is impact on business performance

and increase their expenses of business. In order to that, the planned raw material is 43200 but
the expense done with 42720 that directly reflect company have benefits of 480 because it is
lower than the actual expenses and its is considered as favourable. Other, wages and salaries is
planned 10600 but expenses is 10540. That is favourable because company have benefit 60.
Facility of rent is planned 4300 but expenses is 5100. That is loss for company i.e. 800 which is
considered as an adverse impact. On the other side, the planned expense not expected in correct
manner in correct manner and as a result, the total of expenses is numbered as 65630 out of
66740. On the other side, flexible budget is also considered as adverse and it is planned budget is
14820 but the actual is 14470, 350 is variance and is actual difference between the planned and
actual budget. As per the operating income is 13360 and it is seems to be adverse with a an
amount of 1460. Thus, it is all because of low sales and higher expenses.
C) Activity of Variance should be concerned to management.
There are various activities which are adverse as per budget. That should be concerned to
management for control the adverse impact of budget in positive manner. For that here is
mention activity of variance are as follows:
Sales of product are lower:
This is very important and essential activity which is need to consider by management.
Most of the time sales of company is lower than as per the expectation of cafe. This is because of
the reason behind of this is to quality of food item is not similar and poor. Through that sales are
lower than as per their daily sales of cafe (Pfenninger and et.al., 2017). As per the quality of
goods sales of company is decrease any time and that is lower than per the expectations. For that
company need to make sure about quality of food product and meals. This creates negative
impact on the business and which is not mentioned in the budget and that is need to consider by
management.
Fixed expense are incorrectly forecasted:
This fixed assets of company and Twin river cafe is forecast incorrectly which is the
main concerns that is gives adverse impact. This creates issues for Twin river cafe and company
to manage their budget (Pye, Sabio and Strachan, 2015). As per the economic changes, the
landlords replace agreement or increase rate of rent. This is also not mentioned in the budget and
through that facilities of rent expenses gives and seems as adverse. This is important to concerns
by management of Twin river cafe.

On the other side price of fuel is also increased suddenly as per government norms which
is also considerable by management because that is very important and effective for twin river
cafe and company (Rahimi and Kozak, 2017). This creates a sudden changes in business
conditions which reflects negative impact on the business. That is not good and manageable by
Twin River cafe and company. This also gives adverse impact on budget because of fuel charges
are increased by authorities.
Those are the activities of variance which is considered by management for control their
budget expenses and better results.
D) Advise to cafe on what need to do to support their objectives.
For mitigating with the quality issue of the food it is very necessary for Twin River cafe
to use all the raw materials of good and superior quality (Ren and et.al., 2016). This is very
necessary because if the ingredients and material of food will not be of good and better quality
then it will not be beneficial for the company.
Thus, for this Twin café can use the method of setting of standards. Under this café will
set some standards and they need to follow the standards. Also, this will help the café in
managing the quality because if the quality is not in accordance with the standards then the
measure to improve the quality can be taken.
Also, for managing the quality of the food it is very necessary for the café to time- to-
time audit the food making process and the area where the food is being made (Schurer and
et.al., 2017). This is necessary to ensure that the area is clean and no harmful substances are
being placed there.
Also, the café must abide by all the necessary rules and regulation relating to the food
and their quality as it is very necessary for them to follow all the rules and regulations.
Due to changes in the weather and climatic conditions there are many changes in the rent
and other charges (Fais and et.al., 2016). Thus, it is advisable to the café to timely monitor and
evaluate the environment and related changes so that they can assume what changes can be made
in the rent and other charges.
CONCLUSION
From the above study it had been concluded that the managing finance in the company
and twin river cafe has important part. For preparing budget company and cafe has specific
reasons which had been helpful for company to manage their expenses and keep protect form

adverse impact. Those objectives such as allocation of budget and predict cash flows. The report
also prepared by company revenue report which shows the adverse and favourable impact and
effects of company. On the other side, there has various activities which has need to concerns by
management for control them and at the end of report also highlight actions for Twin river cafe
in order to manage and control the more expenses of company.

REFERENCES
Books and Journals
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Pfenninger, S. and et.al., 2017. The importance of open data and software: Is energy research
lagging behind?. Energy Policy. 101. pp.211-215.
Pye, S., Sabio, N. and Strachan, N., 2015. An integrated systematic analysis of uncertainties in
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Rahimi, R. and Kozak, M., 2017. Impact of customer relationship management on customer
satisfaction: The case of a budget hotel chain. Journal of Travel & Tourism Marketing.
34(1). pp.40-51.
Ren, L. and et.al., 2016. Exploring customer experience with budget hotels: Dimensionality and
satisfaction. International Journal of Hospitality Management. 52. pp.13-23.
Schurer, A. P. and et.al., 2017. Importance of the pre-industrial baseline for likelihood of
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