BSBFIM501 Manage Budgets and Financial Plans: Assessment Tasks

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BSBFIM501 MANAGE BUDGETS AND FINANCIAL PLANS

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Bsbfim501 Manage Budgets and Financial Plans
Table of Contents
Assessment task 1............................................................................................................................2
Task A..........................................................................................................................................2
Task B..........................................................................................................................................4
Assessment task 2............................................................................................................................6
Task A..........................................................................................................................................6
Task B..........................................................................................................................................6
Assessment task 3..........................................................................................................................10
Task A........................................................................................................................................10
Task B........................................................................................................................................11
Assessment task 4..........................................................................................................................14
Task A........................................................................................................................................14
Task B........................................................................................................................................16
Task C........................................................................................................................................18
Task D........................................................................................................................................20
Task E........................................................................................................................................20
Reference list.................................................................................................................................22

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Bsbfim501 Manage Budgets and Financial Plans
Assessment task 1
Task A
1. a. Areas in budget those are not achievable, unclear and inaccurate
Areas if inaccuracy has been identified to be as follows;
Sales commission rate
Sales commission rate has been wrongly accounted for. This is because as per knowledge
of the sales manager, it has been found out that the sales commission is projected to be 2.5%.
However in it has been seen that 2% of sales has been calculated to be the commission. Thus the
actual commission should be $75000 for the financial year and for each quarter it should be
$18750.
Sales
The sales have also been wrongly accounted in the budget and have been kept fixed for
each quarter. It has been seen that, the second quarter has reportedly seen 30% more sales
revenue than other quarters. Hence instead of $750000 should be changed $1000000. This means
sales for other quarters are $666666 each.
Repairs and maintenance
In quarter 1 the repair and maintenance should account for 90% of the total amount hence
instead of $12500, it should be calculated to be $45000.
Commission for cost centre A
Commission for cost centre A should also be done as the as the total commission has
been $75000 hence on an equal basis, it should be changed to $25000.

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Bsbfim501 Manage Budgets and Financial Plans
Net profit before interest and taxes
Changes in net profit before tax and interest that is EBIT is required to be made. This is
because it has been decided by the company Big Red Bicycle Pty Ltd has decided to achieve a
net profit before interest and tax to be $1000000. The required changes in net profit due to
adjustments made and rectifications made in sales commission as well as sales for second quarter
can be made.
Inaccurate tax rate
The tax rate has been found to be 30% as per Australian Taxation office requirements.
Hence rate of 25% is observed to be inaccurate (ato.gov.au, 2019).
b. Necessary changes
The necessary changes are required to be made as per Australian taxation Office
requirements (ATO) which has made it mandatory to file returns accurately (Otley, 2019). This
is made mandatory so that the company is not subjected to over and under reporting of income or
profits earned (ato.gov.au, 2019).
The necessary changes that should be negotiated have been found out to be changes in
sales commission so that actual revenue is not under reported. The projected net profit before
interest and taxes is also required to be maintained hence changes in commission is necessary.
On the other hand tax rate as per Australian taxation office is found out to be 30%
however the firm has charged only 25% (ato.gov.au, 2019). This inaccuracy should also be
changed so that net profit after tax is accounted to be accurate.
In order to make the necessary changes, the manager should follow a bottom up
approach; this would help in finding the faults made. It would also bring to fore the faults in
communication as well as the rectification in the system of the company so that no department

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Bsbfim501 Manage Budgets and Financial Plans
reports under or over allocation of costs (Shover, Job & Carroll, 2019). This would help in
preparing a proper budget that is able to forecast appropriately the revenues and expenses that
would be incurred by the management.
Task B
2. Contingency plan
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan: Sales manager
Name: xyz Position: Manager of sales
centre A
Risk identified: Reduction in sales volume by 20% for the financial year
Strategies/activities to minimise the risk By when By whom
Selling large amount of bicycles to overseas location
that is out of Australia
By quarter 1
itself
Sales
centre A, B
and C
Diversification of product range and the company
should start selling bikes, and scooters
By the end
of quarter 2
Operations
and
manufactur

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Bsbfim501 Manage Budgets and Financial Plans
ing units
Controlling expenses such as telephone, bank charges,
and advertising
By the end
of quarter 1
By cost
and finance
units
Table 1: Contingency plan
(Source: learner)

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Bsbfim501 Manage Budgets and Financial Plans
Assessment task 2
Task A
Budget is mainly a financial document that used to estimate the future income and
expenses of the organisation. It helps to know the revenue of the company in advance by
preparing the budget plan. As a managing director in Big Red Bicycle Pty Ltd the budget is
planned to show the increase in revenue of the company. The budget is prepared determine the
company's fixed costs, it also include variable expenses and other costs related to the
organisation. The first step that is taken for budgeting of the organisation is the incomes or
revenue of the business is being added. Then the fixed cost of the company like the rent, supplies
and supplies in the business. Hence then the variable expenses are being determined to increase
the profitability of the organisation.
Some variable expenses that are determined for example marketing expenses of the
business, office supplies etc. After that the business mainly sees the unexpected cost that arises
which sometimes create problem in increasing some extra cash on hand. As said by Ainsworth &
Deines (2019:42), this creates an issue in funding extra cost from the company. The financial
objective of the organisation is to achieve profit in market. The main risk for the company is
their poor sales because of economic downturn and the increase of expenses mainly the wages
expenses of the company.
Due to this the organisation has achieve low goals in the market and hence this has
decreased the revenue. The budget will help the company to increase their efficiency in market
and the profitability ratio. Due to budget the profit margin of Big Red Bicycle Pty Ltd will

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Bsbfim501 Manage Budgets and Financial Plans
increase and the investment policy. The profit maximization is another main objective of the
organisation which helps to increase due to the budget policy.
Task B
a. Spreadsheet techniques needed to be learnt by Bill Goodale
Since, Bill Goodale has been assigned the job to track petty cash expenses hence he
should learn the basic as maintenance of records in Microsoft excel. As identified from the case
scenario of Big Red bicycle Pty ltd, that Bill Goodale is not accustomed to use Microsoft excel
functions and formula hence he is required to be trained. The training would be provided for
making him able to sum different columns and rows. The basic accounting knowledge would not
be helpful as it would only help in analysing trends of expenses and revenues. According to
Australian Taxation Office requirements all records are required to be made in Microsoft excel
or any accounting software so that it become easy to trace adverse figures or faults. Moreover
the tracking records in Microsoft is easy as well as entering data also becomes easy. This is
because formula can be copied to each cell for a particular item and there is no need to enter the
formula or function again and again.
Therefore the following techniques for learning spreadsheets would be easy;
● Use of Auto fill
It helps in filling different type of series such as date, year and others. Hence Bill
Goodale can use it to auto fill different quarters as well as dates. To start with auto fill Bill
Goodale would be required to start by adding the date from which the quarter begins and the then

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Bsbfim501 Manage Budgets and Financial Plans
click on (+) sign. Clicking and dragging the (+) sign would help in filling the series as Microsoft
excels is able to understand the pattern.
● Summing up a column or row
Since record keeping of petty cash would require Bill to track large number of data and
sum up the columns as well as rows hence use of formula is necessary. In order to add large
number of rows and columns, = (Column 1 Row 1+Column 1 Row 2 +Column 1 Row 2 +...... +
Column 1 Row n) should be learnt. Ismslaiary data of different columns or rows can be applied
in the formula (Henderson et al. 2015). If row is fixed and total of different columns is needed
then the following formula would be useful = (Row 1 Column 1 + Row 1 Column 2 + Row 1
Column 2 +...... + Row 1Column n). Alternatively functions such as =Sum (Column 1 Row 1:
Column 1 Row n) can be used (Wildavsky, 2017). To use this formula Bill would be required to
press = sign and then select the rows or columns he wants to add. On clicking enter he would get
the required result
● Other formulas such as Average or count
These formula would not be required on regular basis still if needed then Bill can apply
the formula of sum that is =Count(number 1:number 2) can be used.
Learning these functions or formulas would not be difficult for Bill Goodales as it is
simple and easy to understand. Practice for a week would help Bill Goodale largely and he
would be able to operate on the taking of records effectively.
b. Recordkeeping requirements for Australian Taxation Office (ATO) and auditing
purposes needed to be understood by Bill Goodale
As per instructions outlined by Australian taxation Office (ATO), a company is required
to keep basic financial records (Collier, 2015). These includes cash book records, records of

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Bsbfim501 Manage Budgets and Financial Plans
payments, and records that help in preparing tax statements as well as returns (ato.gov.au, 2019).
This requirements made compulsory by Australian taxation office is required to be followed
scrupulously by Bill Goodale too as it would help in accounting for taxations and track expense
that have been over absorbed or under absorbed by the various departments.
On the other hand, it has been seen that, the company Big Red Bicycle Pty Ltd has its
own policies for expense reimbursements and petty cash expenses. Proper knowledge should be
acquired by Bill Goodale about the different policies. For example mileage allowances would be
given if they are travelling for work related matters. In addition to these late payments, penalties,
fines and others would not be reimbursed by the company.
In case of petty cash expenses, it has been seen that the company would be required to
issue receipts for cash. Amounts that are found to be in excess of $800 are required to be banked.
Goods and services tax payment is seen to be compulsory for Big Red Bicycle Pty Ltd
and hence Bill Goodale should acquire relevant knowledge about GST payments. For example,
in order to prepare tax invoices, seven pieces of information are observed to be included (Di
Francesco & Alford, 2016). These seven types of information are found to be the least and a
company may require more than that.

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Bsbfim501 Manage Budgets and Financial Plans
Assessment task 3
Task A
Figure 1: Budget variance report
(Source: learner)
A budget variance report has been prepared for all the four quarters, and variances both in
actual as well as percentage have been calculated. It has been seen that, the gross profit has
negatively varied by 7% on an overall basis and it has been adverse in the quarter 1 at 17%.
Again in quarter 2 variance percentages reduced to -11%. It has been seen that only in quarter 3
it has remained favourable for the company at 20%. In case of sales there has been an overall
6% adverse variance. In case of EBIT it has been seen that the net profit before interest and taxes
have verified negatively by 19% for the financial year. However it has been seen that the
company is not able to maintain a variance of minimum 10%. On the other hand, it has been seen

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Bsbfim501 Manage Budgets and Financial Plans
that net profit after tax has also varied by 19% negatively. On an overall basis, only Quarter 3
has been favourable for the firm. This means that the firm is not able to control its expenses on a
large scale and hence has not been able to meet its expected result as well as maintain a profit
before interest and taxes of $1000000.
Task B
Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan:
Name : Tom Copeland Position: Managing Director
Risk identified: Profit for FY more than 10% less than budgeted
Strategies/activities to minimise the risk By when By whom
Production of variance reports on a quarterly basis so
that income and expenditure as well as reduction in
profits above 6% can be controlled.
Q1 PR
Introduction of a permanent incentive program for
very quarter if sales people, are able to achieve the
given target of sales
Q2 PR
No short term employees would be appointed by the
company
Q2 HR