Prepare and Monitor Budgets

This document provides information about the assessment tasks for the unit SITXFIN004 Prepare and monitor budgets. It includes details about the performance evidence and knowledge evidence that will be assessed, as well as the resource requirements and timeframe for the assessment tasks. The document also includes instructions for completing the assessment tasks, including the tasks for Task 1, Task 2, and Task 3.

Student Name
Student Number
Course and Code
Unit(s) of Competency and Code(s) SITXFIN004 Prepare and monitor budgets
Stream/Cluster
Trainer/Assessor
Assessment for this Unit of Competency/Cluster Details
Assessment 1 Short Answer Questions
Assessment 2 Assignment
Assessment 3 Project
Assessment conducted in this instance: Assessment 1 2 3
Reasonable Adjustment
1. Has reasonable adjustment been applied to this assessment?
No No further information required
Yes Complete 2.
2. Provide details for the requirements and provisions for adjustment of assessment:
Student to complete
My assessor has discussed the adjustments with me
I agree to the adjustments applied to this assessment
Signature Date
2nd Assessor to complete
I agree the adjustments applied to this assessment are reasonable
Name
Signature Date
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Assessment Guidelines
What will be assessed
Performance Evidence
The purpose of this assessment is to assess your ability to complete tasks outlined in elements and performance
criteria of this unit in the context of the job role, and:
 prepare a budget for a business that meets the specific business’ needs demonstrate the following when preparing the above budget:
o consultation on components
o analysis of factors that impact on the budget
o completion of draft and final versions of budget within designated timelines
Knowledge Evidence
 types of budgets:
o cash budgets
o cash flow budgets
o departmental budgets
o event budgets
o project budgets
o purchasing budgets
o sales budgets
o wage budgets
o whole of organisation budgets
 budget terminology
 specific industry sector and organisation:
o role and nature of budgets
o budget formats, budget performance and financial reports
o financial reporting procedures and cycles
o features and functions of accounting software programs used to prepare and monitor budgets
 internal and external factors that impact on budget development:
o growth or decline in economic conditions
o human resource requirements
o new legislation or regulation
o organisational and management restructures
o organisational objectives
o scope of the project
o shift in market trends
o significant price movement for certain commodities or items
o supplier availability and cost
 budget preparation and monitoring practices and techniques:
o sources and contents of data required for budget preparation:
 competitor research
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 customer or supplier research
 declared commitments in areas of operation
 financial information from suppliers
 financial proposals from key stakeholders
 income and expenditure for previous time periods
 departmental, event or project budgets
 grant funding guidelines or limitations
 management policies and procedures
 organisational budget preparation guidelines
 performance information from previous periods
o techniques for making budget estimates
o common reasons for deviations and budget deviation management.
Place/Location where assessment will be conducted; Timeframe for assessment tasks
Resource Requirements
Computer with Microsoft excel
Calculator
Spread Sheets:
“Task 1-Hotel Futura Budget_Forecast”
“Task 2-Budget Futura_Restaurant_Bar”
Instructions for assessment including WHS requirements
The assignment for Assessment 2 consists of 3 Tasks
Task 1
Requires you to prepare a draft budget following a meeting with all heads of department where you have
finalised the details and requirements to be included for next year’s budget.
Task 2
Requires you to prepare a final budget, based on the changes made to your draft budget following a
management meeting.
Task 3
Requires you to respond to 3 financial scenarios.
All responses must be typed and clearly referenced to each task. Your trainer will provide you with feedback for
each task. You will be provided with the opportunity to rectify any shortfalls based on the feedback from
submitted work for this assessment.
Each completed spreadsheet must be attached to the relevant task and clearly referenced.
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Statement of Authenticity
I acknowledge that I understand the requirements to complete the assessment tasks
The assessment process including the provisions for re-submitting and academic appeals were explained
to me and I understand these processes
I understand the consequences of plagiarism and confirm that this is my own work and I have
acknowledged or referenced all sources of information I have used for the purpose of this assessment
Student Signature: Date: / /201
This assessment: First Attempt 2nd Attempt Extension – Date: / /
RESULT OF ASSESSMENT
Task 1
Task 2
Task 3
Satisfactory Not Yet Satisfactory
Satisfactory Not Yet Satisfactory
Satisfactory Not Yet Satisfactory
Feedback to Student:
Assessor(s) Signature(s): Date: / /
Student Signature Date: / /
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Task 1
Your Tasks:
You are required to complete a draft budget based on information and factors that were determined during an
executive meeting at Hotel Futura.
A. Access the excel spreadsheet named “Task 1-Hotel Futura Budget_Forecast”. The first tab on this
spreadsheet is labelled “Departments Small” and shows the existing budget figures for the 2016
financial year.
B. Use the template “Draft Budget” on the second tab of the spreadsheet and perform the calculations
below using basic formulas.
Your forecast needs to include the Dollar Figures and the % values for these affected by changes outlined
below.
The % values must be listed for each expense item shown in the Expenses Analysis for each department. All
expenses percentages are to be based on the total revenue for their related category.
You have met with the department heads of Hotel Futura and the following details have been discussed to
prepare your draft budget for 2017:
1. Rooms Division:
a. Due to renovations the rooms available have been reduced to 96%.
b. The forecasted occupancy rate has been adjusted to 80%.
c. The revenue per available room needs to be increased to $150.00
d. The COGS will increase to 15% of total room revenue
e. Staff costs need to be increased to 20% of total room revenue to allow for increases in superannuation
and awards.
f. Other Expenses need to increase to 8% of total room revenue to cover electricity price rises.
2. Catering:
a. The food revenue will be increased by 15% due to a new marketing campaign and specialty menus
b. The beverage revenue will increase by 8%.
c. Staff costs need to be adjusted to 44% of the total forecasted food budget.
d. Other Expenses will need to be increased to 7%.
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3. Banquet:
The Banquet Division will be directly affected by the new marketing campaign which has been directed at
daytime seminars and corporate functions. For this purpose the kitchen has received specialised equipment
including multiple combi steamers, hold-o-mats and sous-vide equipment.
a. The new food revenue budget was set at $ 2,000,000.00 ($2 Million) and the beverage revenue was
increased by 75%.
b. The COGS will increase to 26%.
c. The staff costs have been reduced to 19%.
d. Other Expenses will need to increase to 14%.
4. Room Service:
a. The room service revenue from food needs to be increased by 15%.
b. Due to a different system to clear floors and organise delivery, the staff costs will be reduced to 34%.
5. Mini Bar:
The mini bar budget remains unchanged and increased staff costs are absorbed through different processes.
6. Bar Budget:
a. The food revenue budget has been increased by 25% with the implementation of a Tapas Menu.
b. The Beverage Revenue budget has been increased 20% with the introduction of a new cocktail bar and
happy hour specials.
c. Staff costs will need to be adjusted to 36%.
d. Other Expenses need to be increased to 18%.
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Task 2
Your Tasks:
You have provided the chief financial controller with the draft budget for 2017. Following the recent executive
meeting where the draft budget was discussed, you are now required to establish the final budget reflecting
the changes based on the latest actuals and variances as well as major road works which will affect Futura
Restaurant and Bar during 2017.
A. Access the excel spread sheet named “Task 2-Budget Futura_Rest.&Bar”. The first tab on this spreadsheet is
labelled “Futura Restaurant and Bar” and shows the Draft budget figures for the 2017 financial year.
B. Use the template “Revised Budget” on the second tab of the spreadsheet and perform the calculations
below using basic formulas based on the following changes:
Month Customer numbers Average Spend (Food) Average Spend (Beverage)
January 1850 $ 45.00 $ 9.70
February 2000 $ 37.00 $ 9.70
March 700 $ 42.00 $ 9.70
April 1200 $ 48.00 $ 9.70
May 1200 $ 36.50 $ 9.70
June 600 $ 35.00 $ 9.70
July 950 $ 34.00 $ 9.70
August 800 $ 38.00 $ 9.70
September 900 $ 29.00 $ 9.70
October 650 $ 29.50 $ 9.70
November 980 $ 35.50 $ 9.70
December 2200 $ 48.00 $ 9.70
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1. Calculate the anticipated Food revenue for each month and the yearly total.
2. Calculate the anticipated Beverage revenue per month and the yearly total.
3. Calculate the Total Revenue for each month and the yearly total.
4. Calculate the overheads total for each month (at 90% of turnover for each for each month with 1000 or
more customers and at 96% for each month with less than 1000 customers) and the yearly total.
5. Calculate the profit for each month and the yearly total.
6. Calculate the Cost of Goods Sold for food and beverages, given a combined percentage of 32%.
7. Calculate the staff costs for each month at 31% for each month with 1000 or more customers and at 35% for
each month with less than 1000 customers.
8. Calculate the ‘Other overheads” for the operation.
9. Print a copy of the revised budget.
10. Print the revised budget showing all formulae used.
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Task 3
Your Tasks:
Read the following 3 scenarios and answer the questions attached for each scenario.
Scenario 1:
The finance team has created budget forecasts for Hotel Futura based on carefully researched factors for the last
3 years and these were always very accurate. The recent budget which included all departments of the hotel was
implemented 3 months ago and the forecasted figures for Food Cost and COGS/Beverages in both the Restaurant
and the Bar Operations have blown out by nearly 4.5 percent.
What could be the reasons for this? List 5 examples of areas you would investigate and explain why.
The reasons for the cost of goods blown out are due to rise in the price for supplies, due to poor internal cost
control, the costs have blown oyt also because the company is not able to generate enough revenue and lastly
the management has to cover the cost of the electricity expenses. Further due to the renovations the revenue
has been infused in the renovation process and additional expenses are increasing gradually.
The five areas which shall be investigated are
Sales: To find out whether all the sales are in cash or credit
Closing Stock: To find out whether the amount of sales have not been entered twice to generate gross profit,
Operating Expenses: To check if there are any expenses that are not of operating nature have been added ot the
sub head.
Room Occupancy: The major area that needs to be checked is the room occupancy
Discount: the amount of discount given to the customers and its proper treatment has been done or not
(Unleashed, 2015).
Scenario 2:
Hotel Futura has successfully operated for 7 years. During this period, overall turnover has doubled, and during
the past 3 budget periods annual budgets have been increased by 15% each year which was exceeded each time.
During the last 6 months however, management has noticed that the opposite trend seems to be occurring now.
List 5 external factors which could contribute to this and explain which methods you would use to determine
this.
The external factors due to which the Hotel Futura is suffering from the reverse trends are outlined below.
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Economic factors: The economic factors include the price set by the competitors for the same services provided
by the hotel futura
Legal changes: the policy of the legal matters like leasing of the land and building can affect the sales once the
lease has come to an end and not renewed
Technology: due to shifts in the technology the sales of the hotel can be affected as the new technology, design
and the structure will help in shaping the hotel and thereby attracting most of the customers.
Competition: the strategies used by the other competitors can directly affect the position of the hotel futura
Political factors: political factors prevailing in the market can affect the survival of the company
The methods used to determine which factors are affecting the company are basically SWOT analysis , Porter’s
five forces model and other models like TOW matrix that can define the variances .
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Scenario 3:
You have successfully negotiated the draft budget with each department head of the Hotel which has now been
approved by the director and implemented 6 weeks ago.
You have finalised the financial data of the Hotel for the next management meeting and noticed the following:
a.
Department Budget Actual Variance
Kitchen/Food Cost 28% 32% (-)$ 13467
b. The recently appointed F&B Manager has purchased 240 bottles of Hill of Blessings @ $90 each which
represents a saving of $30 per bottle. However this exceeds the par stock level by 220 bottles and has
created a cashflow problem, given the negative performance of the kitchen during this period as well.
1. Which reports would you need to prepare for these issues?
The report that needs to be prepared is the Performance improvement plan and the variance report
2. Who is it essential to involve when these matters need to be discussed?
The main person who needs to involved are the purchase manager, the budget manager, the production
manager and the Kitchen associate.
3. Suggest options to address and rectify these issues.
Since the cash flow problem has arisen the management shall keep a cash flow forecast.
The stock manager shall review the stock on the daily basis
Anticipation of the problems can be listed out before they happen
The company shall tighten up the outgoings of the firm
Lastly the management shall review the payments regularly
4. How could the cashflow issue be addressed?
The cash flow issue can be addresses by keeping the short term loans,, small business line of credit, by
establishing the sound credit terms with trade partners and suppliers, factoring of invoice and the
financing of the inventory (Fit small business, 2018).
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References
Fit small business, (2018). 9 Ways to Solve Business Cash Flow Problems. Retrieved from
https://fitsmallbusiness.com/how-to-solve-cash-flow-problems/
Unleashed. (2015) Five Effective Ways to Reduce Cost of Goods Sold. Retrieved from.
https://www.unleashedsoftware.com/blog/five-effective-ways-reduce-cost-goods-sold
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