Comprehensive Financial Analysis and Budgeting for Motel Operations

This report provides a comprehensive financial analysis of a motel's operations, starting with a budgeted income statement. It offers recommendations for non-financial users, addresses financial management issues like delegation of authority and inventory systems, and explores communication strategies with management. The report calculates wages, investigates variances in the budget, and suggests the inclusion of new expenses like meal costs. It also frames new company policies for stock ordering and discusses the impact of these policies. A revised budgeted income statement is presented, along with an analysis of the net profit after tax, expense reduction strategies, and the implications of GST. The report includes cost calculations, a discussion of key business items, a detailed budgeting template, and recommendations for new software to improve financial data management. The report references several financial and accounting sources to support its analysis.

MANAGE FINANCES

Table of Contents
1. Budgeted income statement for motel.....................................................................................3
2. Recommendations to non-financial users................................................................................3
3...................................................................................................................................................4
a) Financial management issues..................................................................................................4
b)Communicating issue with the management............................................................................4
4. Calculation of gross wage of supervisor per week..................................................................4
5. Investigate the variance...........................................................................................................4
6. Adding of new expenses in the budget....................................................................................5
7. Framing new company policies...............................................................................................5
8 Revised budgeted income statement.........................................................................................5
9...................................................................................................................................................6
a) Current net profit after tax.......................................................................................................6
b) Reducing of actual expenses...................................................................................................6
c) Inclusion of GST and issues of not recording GST.................................................................6
10. Calculation of cost per annum...............................................................................................6
11. Discussion of five items related to the business....................................................................7
12. Budgeting template................................................................................................................7
13. Recommendations of new software.......................................................................................8
REFERENCES................................................................................................................................9

1. Budgeted income statement for motel
Particulars Per day Yearly
Budgeted nights booked 24
Tariff rate 120
Tariff revenues 2880 1051200
Total sales 1051200
Less variable costs
Room servicing labor 20 175200
Room servicing supplies 5 43800
Total variable cost 219000
Contribution 832200
Less fixed costs
Admin/reception salaries 60000
Grounds & maintenance 50000
General manager 85000
Utilities 90000
Depreciation of PPE 140000
Total fixed cost 425000
Net profit before tax 407200
Less estimated tax expense (30%) 122160
Net profit after tax 285040

2. Recommendations to non-financial users
It has been observed from the budgeted income statement that the above statement has
generated profit after tax amount is 285040 (Cole and Sokolyk, 2016). The total expenses of
wages to be paid by this entity includes admin and reception salaries of 60000, grounds and
maintenance salary of 50000, general manager salary of 85000 which is total of
60000+50000+85000 which is equal to 1950000. The current profit after tax is sufficient to pay
of yearly wages of an enterprise. The national wage rate of country should be followed in order
to provide deserving wages to all the employees of this organization as it is tax free wages which
will not imposed legal consequences on an enterprise.
3.
a) Financial management issues
 The current problem faced by this management is the delegation of authority as the
owner itself handle all kinds of responsibilities.
 There is no proper application of inventory holding system as just in time system should
be implemented by recording stock in stock ledger.
 Budgeting problem is another important issues faced by this enterprise.
 Pricing need to be set properly in order to meet all expenses without decreasing their
overall profit.
b)Communicating issue with the management
The professional communication is done by sending email regarding the issues to take an
appointment to talk regarding problems with the management. The evidences will be obtained
for the issues currently faced by an enterprise as without evidence an individual will not able to
defend their case. The polite tone will be used in order to discuss personally with the
management by developing solutions recommended to the management.
4. Calculation of gross wage of supervisor per week
Per day wages of administration employees
=60000/3=20000/365=55 per day
Supervisor's wages=385(55*7)+(385*10%)= 424 weekly wages of employees

5. Investigate the variance
The variance analysis is one of the concept which can be used by an individual in order to
compare actual and the budgeted figures (Abroud, 2015). The employee had claim regarding
bathroom supplies of $60,000 in the previous year which is charged in the current profit for the
previous year expenses. It has been ascertained that the bathroom supplies yearly figure shown in
the current budgeted income statement is totally different from the amount charged by the
employer.
Variance= $60000-$43800=$16200 is not taken into considerations which will be taken into
account by making adjustments.
6. Adding of new expenses in the budget
The current cost of meal is regarded as one of the important cost involved in an enterprise which
is essential for an entity in order to retain all employees in the business. This food cost will be
included in the variable cost as this cost changes as per the needs and expectations of all the
employees (Lagoarde-Segot, 2015). This is to be recorded in order to decrease the impact of
GST applied on an entity for the variable cost incurred in an enterprise.
7. Framing new company policies
a) The stock in an enterprise are ordered after receiving material purchase requisition note from
the purchase department and ordered by assigned individual. The quantity of stock and their
price are recorded by preparing bin cards and submitted to the stock ledger person.
b) The raw materials used in manufacturing of products are ordered in an entity or anyother
supporting elements in manufacturing. The stationery and all other goods used in operating a
business successfully are also ordered.
c) The time interval in which goods are ordered will be monthly or weekly depending on the
business requirements.
d) The consequences of the above policies will affect the overall productivity of an enterprise
and the delayed in the business operations will affect the employment of all the assigned
authority who handle their responsibilities.
8 Revised budgeted income statement
Particulars Per day Yearly

Budgeted nights booked 24
Tariff rate 120
Tariff revenues 2880 1051200
Total sales 1051200
Less variable costs
Room servicing labor 20 175200
Room servicing supplies 5 60000
Food meal cost 20000
Total variable cost 235200
Contribution 816000
Less fixed costs
Admin/reception salaries 30000
Supervisor salary 20352
Grounds & maintenance 50000
General manager 85000
Utilities 90000
Depreciation of PPE 140000
Total fixed cost 415352
Net profit before tax 400648
Less estimated tax expense (30%) 120194.4
Net profit after tax 280453.6

9.
a) Current net profit after tax
The revised budgeted income statement is able to generate less amount of net profit after tax
from the earlier budgeted period (Johnstone, 2015). The profit has reduced from earlier period by
$4586.4 due to the addition of additional expenses incurred by an enterprise.
b) Reducing of actual expenses
The administration employees salaries amount of $60000 per year has decreased in this revised
statement due to the inclusion of new supervisor's salary taken into account. This will decrease
the amount as the promotion of one employee among the administration employees top the
higher stream of supervisor.
c) Inclusion of GST and issues of not recording GST
The above figures are taken into account by including GST amount included in all the
figures. An entity failed to file with the GST then it need to pay 1% as penalty for the amount
due for GST as penalty along with the total tax amount. The failure to register when it is
demanded by the authority than it need to pay $250.
10. Calculation of cost per annum
Particulars Actual payroll cost
Super
9.5%
Payroll tax
2%
Safe Work
1% Sub Total
Room servicing labor 160965 16644 3219.3 1752 21615.3
Admin/reception
salaries 189000 2850 3780 300 6930
Grounds &
maintenance 105000 4750 2100 500 7350
General manager 87500 8075 1750 850 10675
11. Discussion of five items related to the business
There are five items of the current business which needs to be discussed with an enterprise owner
which are given as below:

 Variable cost should be taken into account properly as it affects the overall sales value of
an enterprise.
 The taxation amount specifically charged to the wages will reduce the overall revenue
 The pricing of the motel should be kept higher to meet all expenses
 Fixed cost of an enterprise will be reduced over the years
 The preparation of cash flow statement in order to ensure the cash movement of an
enterprise.
12. Budgeting template
Particulars Day Yearly
Budgeted nights booked 24
Tariff rate 120
Tariff revenues 1051200
Less variable costs
Room servicing labor 20 175200
Room servicing supplies 5 60000
Super ananuation@9.5% on servicing labor 16644
Payroll tax@2% on servicing labor 3219.3
Safe work @1% servicing labor 1752
Supermarket supplies 20000
Total variable cost 276815.3
Contribution 774384.7
Less fixed costs
Admin/reception salaries 30000
Super ananuation@9.5% on Admin/reception salaries 2850
Payroll tax@2% on Admin/reception salaries 3780

Safe work @1% Admin/reception salaries 300
Supervisor's salary 20352
Grounds & maintenance 50000
Super ananuation@9.5% on Grounds & maintenance 4750
Payroll tax@2% on Grounds & maintenance 2100
Safe work @1% on Grounds & maintenance 500
General manager 85000
Super ananuation@9.5% General manager 8075
Payroll tax@2% General manager 1750
Safe work @1% General manager 850
Utilities 90000
Depreciation of PPE 140000
Total fixed cost 440307
Net profit before tax 334077.7
Less estimated tax expense (30%) 100223.31
Net profit after tax 233854.39
13. Recommendations of new software
There are various reasons which are given as follows in order to improve the current financial
data of this entity:
 The ERP software can electronically generate all financial data in good manner.
 This software can be used as evidence in order to assess the financial performance
 The errors can be easily spotted as unmatched figures will tell the truth
 The vouchers of every date will ensure the accuracy of all the business transactions
 The results can be ensured by preparing all reports by entering data in the software.