Managing Budget and Financial Plans for Big Red Bicycle Pty Ltd

Running head: MANAGING BUDGETS AND FINANCIAL PLANS
Managing Budget and Financial Plans
Name of the Student:
Name of the University:
Author’s Note:

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MANAGING BUDGETS AND FINANCIAL PLANS
Table of Contents
Assessment 1...................................................................................................................................3
Introduction..................................................................................................................................3
Budget Analysis...........................................................................................................................3
Contingency Plan.............................................................................................................................4
Changes in budget............................................................................................................................8
Assessment 2...................................................................................................................................8
Financial Policies of the Company..................................................................................................9
Training Plan.................................................................................................................................10
Assessment 3.................................................................................................................................11
Budget Preparation........................................................................................................................11
Modified Contingency Plan...........................................................................................................14
Assessment 4.................................................................................................................................16
Activity 2.......................................................................................................................................17
Activity 3.......................................................................................................................................18
Activity 4.......................................................................................................................................19
Reference.......................................................................................................................................21

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MANAGING BUDGETS AND FINANCIAL PLANS
Assessment 1
Introduction
As per the case study provided in the question, Big Red Bicycle are manufacturer of
bicycle business and sell the bicycles in the local market of Australia. As per the strategic plan of
the management the company aims to earns net profit before tax of $ 1,000,000. The company is
also considering to expand the business by starting manufacturing in overseas market and this
will also be helping the business to take advantage
The main purpose of this assignment is to analyze the master budget prepared by the
management and also identify whether there are any discrepancies, also areas which are not
achievable for the business and also formulate a contingency plan which can counter the risks
which are faced by the business.
Budget Analysis
As per the master budget prepared by the company the figure of sales is $ 7,50,000 which
is same as estimated for every year. As per the master budget of the company, all the cost and
revenues which are estimated by the business keeping all the costs and revenues of the business
same for each year (Rubin 2016). The master budget is for the year 2011-2012 and is compared
with the actual budget of the company. The sales figure of the company as shown in the budget
for the first quarter is shown at $ 6,00,000. The sales in the second quarter for the company is $
9,00,000. The figure of sales as per the budget is evenly spread which is not possible as it is very
likely the sales of the company will fluctuate for each quarter of the company. In addition to this,
the commission amount which is shown in the based on the 2% of the sale amount which might
not be realistic in nature. The repair and maintenance expense which is shown by the company in
the budget is not clear and have been evenly distributed among the four quarter which is $

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MANAGING BUDGETS AND FINANCIAL PLANS
11,250. The repair and maintenance expenses which is shown evenly through out the years is not
realistic as it is possible that in the second quarter the business might not incur any repair and
maintenance expenses. The sales which is recorded is different from the management ‘s
expectation of the same due to economical downfall of the market (Wildavsky 2017).
The sales manager needs to clarify the figures of commission which is shown in the
Master Budget as prepared by the company. The commission is allowed at 2% on the figures of
sales. as the figure of sale is not certain, the commission which is obtained from such a source
might not be reliable or accurate. The sales manager also needs to clarify from the management
about the expenses which are recorded by the management such as repair and maintenance
expenses which is shown for al the quarter equally as shown in the budget of the company. The
management needs to change the sales figure of the company and incorporate an accurate
estimate. In the case of expense, which the management expects to incur are to estimated
accurately as this determine the targeted profit of the company (Henttu-Aho and Järvinen 2013).
Due the fall in the sale figure the variances which can be expected by the business are more than
the budgeted figure. The sales managers needs to clarify the same from the management of the
company.
Contingency Plan
Contingency plan 1

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MANAGING BUDGETS AND FINANCIAL PLANS
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan: Sales Manager of Sales Centre A
Name Position Sales Manager
Risk identified: Discrepancies between company’s profit goals and Budgeted
Projections which can vary by 20%
Strategies/activities to minimise the risk By when By whom
Exploration of new markets in overseas for business in
order to overcome the domestic economic condition
(Talluri et al. 2013)
25th March Sales Manager
Implementation of innovative techniques in order to gain
competitive advantage which might affect company’s
sales
5th June Production
Manager
Contingency plan 2

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MANAGING BUDGETS AND FINANCIAL PLANS
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan: Sales Manager of Sales Centre A
Name Position Sales Manager
Risk identified: Discrepancies in the commission balance from that of the
Budgeted Figure.
Strategies/activities to minimise the risk By when By whom
Introduction of commission system which can be more
effective
25th May Operational
Manager.
Implementation of Progressive Based Commission which
rewards on the basis of the performance of the company.
15th
October
CEO and Top
level
Mangement.