Manage Budgets and Financial Plans |Assignment

Running head: MANAGE BUDGETS AND FINANCIAL PLANS
Manage Budgets and Financial Plans
Name of the Student:
Name of the University:
Author’s Note

MANAGE BUDGETS AND FINANCIAL PLANS
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Table of Contents
Assessment Task 1.....................................................................................................................2
Budgeting Practices and Negotiating Changes......................................................................2
Identification of Issues and Negotiating Changes..................................................................2
Basic Accounting Principles..................................................................................................3
Relevant Legislations and ATO Requirements......................................................................4
Techniques for Managing Budgets........................................................................................5
Contingency plan...................................................................................................................5
Assessment 2..............................................................................................................................7
Financial Policies of the business..........................................................................................7
Training plan..........................................................................................................................8
Assessment 3..............................................................................................................................9
Implementing contingency plan...............................................................................................13
Activity 1..............................................................................................................................14
Activity 2..............................................................................................................................15
Activity 3..............................................................................................................................15
Activity 4..............................................................................................................................16
Management Accounting and Planning Principle................................................................17
Reflections................................................................................................................................18
Reference..................................................................................................................................20

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Assessment Task 1
Budgeting Practices and Negotiating Changes
The practice of budgeting is closely followed in a business for the purpose of
effectively listing the financial goals of the business and ensuring that the same are achieved.
Budgets allow a business to estimate the costs and revenue which is associated with a
business and it can also be used for allocation of resources and evaluation of performance of
the business1. It is also to be noted that the tool is also used for the purpose of formulating
financial plans for a business. In this case the business of Big Red Bicycles is considered
which is aiming to achieve a net profit before tax of $1,000,000. In order to achieve this goal,
the management needs to control the expenses and at the same time also enhance the revenue
which is generated by the business.
The analysis of the budget shows that the business is focusing more on advertisement
and promotion so that more awareness can be achieved. Further, a major portion of the
expenses is due to the wages which needs to be controlled in order to achieve the objective of
the business.
Identification of Issues and Negotiating Changes
One of the main changes which is required to be made by the management is related
to reducing the budget for advertisement so that the total costs of operations can be improved.
The company mainly engages in production of bicycles which is quite a regular good and
therefore such extensive advertisement is not required. The management of the company
needs to control such expenses in order to enhance the profits of the business2. In order to
control the expenses, proper quality measures can be introduced and unnecessary costs can be
avoided. Big Red Bicycle Pty Ltd needs to maintain a good relation with retailers, so that the
1 Lauth, T.P., 2014. Zero‐Base Budgeting Redux in Georgia: Efficiency or Ideology?. Public Budgeting &
Finance, 34(1), pp.1-17.
2 Needles, B.E., Powers, M. and Crosson, S.V., 2013. Principles of accounting. Cengage Learning.

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distribution of the products can be done freely. The expenses which is incurred by the Big
Red Bicycle Pty Ltd needs to be minimized which would also ensure that the cash outflows
for the business is kept at a minimum. The business also has sponsorship for which huge
amount of cash outflow is shown and therefore, it can be said that such expenses can be
reduced by the business.
The variable costs of the business which includes wages and salaries are shown to be
slightly higher and therefore the same can be controlled by the business. In order to achieve
this, the management needs to recruit skilled employees and labors according to their skills so
that a level of productivity can be maintained. If the efficiency level of the employees can be
enhanced than labour costs can be reduced significantly. The management of the company
needs to initiate training programs in order to enhance the efficiency level of the staff
members.
Basic Accounting Principles
The accounting concepts and principles are important for formulating an accounting
report so that proper information is included and quality of disclosures can be maintained. In
the case of Big Red Bicycle Pty Ltd, the accounting concepts and principles which are
applicable are Money Measurement Concept and Cost Concept. The concept which is stated
is considered to be important for the purpose of preparing the budget and also for identifying
the issues3. In the money measurement concept, all the transactions which are related to
money are recorded here. The business can appropriately measure the cash outflows of a
business with the help of this concept. It is the responsibility for the Senior Accountant, Pat
Roberts to monitor the cash inflows and outflows of the business. This would help the
management of the company to control the costs which is related to advertisement as well
wages and salaries of the business.
3 Schläfke, M., Silvi, R. and Möller, K., 2013. A framework for business analytics in performance
management. International Journal of Productivity and Performance Management.

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As per the cost concept, the management needs to measure the assets on the basis of
original costs of the business. The business needs to identify the assets such as machineries
which are used for the manufacture bicycles and therefore the cost concept is considered to
be important4. The management needs to ensure that proper monitoring of the activities needs
to be done so that the activities of the business can be executed efficiently. The management
would be benefitting greatly by following this concept and the same also helps in controlling
the costs of the business.
Relevant Legislations and ATO Requirements
The Australian Tax Office implements the tax regulations and ensures that the same
are adhered to by businesses while conducting their operations. In addition to this, ATO also
makes changes to the law as and when required for effective tax compliance5. Some of the
important regulations which are administered by ATO are superannuation, payroll, income
taxes regulations.
The requirements which is needed for the reporting includes:
 Payroll reporting
 Monthly organizational activity statements
 Financial year reporting
In case of payroll reporting, one of the major requirements is to lodge report in respect
with Australian Tax Office (ATO) with the application of Single Touch Payroll Software.
There is also a need for proper reporting of transactions and appropriate maintenance of the
same so that it complies with the new process of reporting.
In case of monthly organizational activity statements, the concerned entity needs to
submit report which comprises of activities of the business that can be of monthly, quarterly
4 Renz, D. O. (2016). The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
5 Pettigrew, A.M., 2014. The politics of organizational decision-making. Routledge

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or annually.
In case of financial year reporting, entities are required to prepare financial report for
estimating the taxes from 1St July to 30Th June. This will help the organization in lodging the
income tax return for that period. This is important for maintaining transparency in the
operations of the business.
Techniques for Managing Budgets
The purpose of formulating a budget is to formulate a guideline for managing the
revenue and expenses associated with the business. It is one of the valuable tools which can
play a vital role in planning process and also for implementing a plan. The key principles
which should adhere to while preparing a budget are:
 It should be prepared considering the most recent market trend information for
accuracy.
 It must be capable of recognizing errors in transactions.
 The changes which are made in an organization should be detectable.
 It should give a correct estimation of the resources which the business.
Contingency plan
Contingency plan 1
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan: Sales Manager of Sales Centre A
Name: John Marks
Position Sales Manager
Risk identified: Variance among the budgeted profit and actual profit by 20%