Individual Coursework 1: Budgeting and Variance Report

This report provides a comprehensive analysis of budgeting, revenue, spending variances, profitability, and sustainability for London Docks Café. It begins with an overview of budgeting objectives and benefits, highlighting the importance of robust budgetary processes. The report then presents a detailed variance analysis for December, identifying areas of concern for management based on revenue and spending discrepancies. Furthermore, it defines profitability and sustainability, offering specific recommendations for London Docks Café to achieve both mandates, emphasizing ethical business practices, cost minimization, and the adoption of modern technologies. The conclusion summarizes the key findings, reinforcing the significance of financial planning and sustainable business practices for long-term success.

INDIVIDUAL
COURSEWORK
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Table of Contents
INTRODUCTION.................................................................................................................................3
TASK 1: Outlining the objective of budgeting and explaining how London Docks Café benefits from
engaging in robust budgetary processes?...............................................................................................3
TASK 2: Presenting a report showing London Docks Café’s revenue and spending variance for
December?.............................................................................................................................................5
TASK 3: Based on the variances report prepared above, which areas of activity should be concern to
the management of London Docks Café?..............................................................................................5
TASK 4: Explaining the terms profitability and sustainability. Assessing and advising the London
Docks Café on the measures they should adopt to ensure the attainment of both mandates..................6
CONCLUSION.....................................................................................................................................6
REFERENCES......................................................................................................................................7
REFERENCES......................................................................................................................................8
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INTRODUCTION
The aim of the present report is to get insights upon various concepts related to budget
and its benefit to the company, along with revenue and spending variances that London
Docks café experiences in its due course of business (Dale and et.al., 2018). It also includes
understanding of profitability as well as sustainability which should be adopted by the
company in order to have highest level of success along with an effective attainment of both
mandates in due course. The term budgeting refers to a preparation of financial draft by
company’s finance experts or accountants mentioning all the estimates of income and
expenses which the firm will have in a specific year or covering for a particular target.
Revenue is related with the net income or profit of the company which they earn from sale of
their manufacturing or offering which could be any product or services. The concept of
profitability is concern with success and high brand image within marketplace which brings
profits to them. Whereas, the sustainability includes an ability of firm to stay in market for
long period of time such as several decades or centuries through effective use of resources as
well as ethical conduct of business.
TASK 1: Outlining the objective of budgeting and explaining how London
Docks Café benefits from engaging in robust budgetary processes?
The term budgeting refers to a preparation of financial budget by every company
comprising an idea about the income and expenses which they can experience within a
specific year or for a particular task. The process of formulation of budgets by company’s
accountants or financial experts is referred as budgeting. The various objectives of budgeting
are mentioned below:
 To have fair estimation of all expenses and income so to develop proper plan and
strategies related to specific task.
 Through the help of budgeting companies are comfortable in comparing their actual
results with the set one or with the previous tasks which gives them an idea for taking
different decisions.
 Budgeting is also prepared with an objective of having proper allocation of funds to
each department of business that will then plan and execute their respective actions
flawlessly (Emerling and Wojcik-Jurkiewicz, 2018).
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The various benefits that London Docks Café enjoys from engaging in robust budgetary
processes are as follows:
 Budgeting or budgetary processes benefits London Docks café from having full
control over their finances and have effective utilisation of those without having
nay wastages or losses.
 Budgeting assists London Docks Café in having high focus on its financial
objectives which is done by proper planning and forecasting future trends or
market in time.
 This benefits the company London Docks Café in comparing its actual outputs
with standards or with previous budget so can take corrective and necessary
decisions prior to experiencing any losses or set back form market.
The robust budgetary processes comprise of a set step level by level which is followed by
accountants or financial experts while developing budget. The process is being discussed
below:
Step 1. Identifying Assumptions and making funds available: This is the initial stage
in process of budgeting which includes developing certain assumptions upon budget
to add them with full understanding and knowledge that meets the trends that are
associated with various costs and situation. For this London Docks Café is required to
perform a market research so to attain adequate data and information which the
finance experts of company can apply within their budget analysis.
Step 2. Highlighting cost areas: The second stage involves identification of those
areas which involves cost or expenses and helps the company’s management team to
figure out all the relevant factors which can be applied to minimise cost.
Step 3. Setting up of goal and creating a plan: After highlighting all cost areas the
next step involves setting up of a goal for which the budget is being prepared and
planning related activities based on such budget so to accomplish task in smooth and
successful manner.
Step 4. Following the prepared budget and having feedback: This stage involves
working upon objective with the help of budget so to have flawless and effective
completion of such task. Other than this it also involves tracking and having proper
feedback of such budget whether it is going with the objective or need to be modified
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in time in order to have hurdle free achievement of set target (Eton, Fabian and
Benard, 2018).
Step 5. Taking corrective actions: This stage emerges when the budget requires
alteration or modification matching to the set objective. If the forecasted budget
works very well then no modifications or alterations are being required.
TASK 2: Presenting a report showing London Docks Café’s revenue and
spending variance for December?
London Docks café
Variance statement
Particulars
Planning
(A)
Actual
(B)
Variance (C=
A-B)
Favorable/
Unfavorable
Budgeted meals quantity
(q) 20000 18000 2000 U
Revenues 100000 90000 10000 U
Expenses:
Raw material 50000 45000 5000 F
Wages and salaries 10500 10000 500 F
Utilities 3500 3400 100 F
Facility rent 5000 5500 500 U
Insurance 2800 3200 400 U
Fuel 2500 2800 300 U
Net operating income 25700 20100 5600 U
TASK 3: Based on the variances report prepared above, which areas of
activity should be concern to the management of London Docks Café?
In the context of London Docks Cafe's unfavourable variances stem from the
discrepancy between the sum of food actually consumed and the sum of food authorised
expenditure. The average unfavourable disparity of 2,000 meals results in a company's net
benefit variation of £5,600. The company must also depend on the quantity of foods it
already offers, which means that perhaps the café should allow smoking that is slightly higher
than the anticipated quantity in order to achieve the required results. Furthermore, adverse
sales for the period are not a good indicator of the company's financial position and
profitability due to unfavourable amounts sold. In comparison to the estimated quantity of
food to really be produced, two powerful implications for the management are the number of
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foods delivered to customers and whether the proceeds collected from dinner products are
actually serving the purpose of maintaining a stable financial position (Ibrahim, 2019).
TASK 4: Explaining the terms profitability and sustainability. Assessing
and advising the London Docks Café on the measures they should adopt to
ensure the attainment of both mandates.
The term profitability refers to a measurement of company efficiency as well as an
ultimate success which they generate from sale of their item in market as well as through
enhancing their brand value. Sustainability shows an ability of company to conduct long term
business by following ethical and moral conduct. The concept of sustainable profits for any
business refers that a company offers its products or services to the customers in both
environment favourable as well as in profitable manner (Moretti and Kraan, 2018).
The advice to London Docks Café which they should adopt in order to ensure the
attainment of both mandates is mentioned below:
 It is being advices to the company to conduct its business in ethical manner which
neither harms the environment not the sentiments of public.
 Minimising unnecessary waste of money as well as resources is another advice to the
company so that they can attain profitability as well as sustainability in their
business. Profitability is attained when company uses minimum cost and makes
higher profits whereas sustainability is being attained when the resources are utilised
according to the need.
 London Docks Café can use latest technologies in its operations which brings greater
productivity ultimately higher profitability along with effective utilisation of
resources which opens a door for sustainability.
CONCLUSION
From the above report it can be concluded that preparation of budget is very much
essential and relevant by the companies in order to have proper estimation of relates expenses
as well as incomes. This is also helpful in measuring the actual performances with the set
one. Revenues and variances are one which is always a matter of concern for each company.
Increasing revenue and minimising expanses in variance is the major motive of any company.
The term profitability and sustainability includes generation of long term business profits
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through ethical and effective conduct of business which also helps them in enhancing their
band image as well as having sustainable business for many years.
REFERENCES
Dale, E., Kyurumyan, A., Kharazyan, S. and Barroy, H., 2018. Budget structure in health
and transition to programme budgeting: lessons from Armenia (No.
WHO/UHC/HGF/HEF/CaseStudy/18.12). World Health Organization.
Emerling, I. and Wojcik-Jurkiewicz, M., 2018. The risk associated with the replacement of
traditional budget with performance budgeting in the public finance sector
management. Ekonomicko-manazerske spektrum, 12(1), pp.55-63.
Eton, M., Fabian, M. and Benard, P.O., 2018. Cash Budgeting and Organizational
Performance of Private Firms in Uganda: A Case of Kabale District, Western Uganda.
Ibrahim, M.M., 2019. Designing zero-based budgeting for public organizations. Problems
and Perspectives in Management, 17(2).
Moretti, D. and Kraan, D.J., 2018. Budgeting in France. OECD Journal on Budgeting, 18(2),
pp.8-72.
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