Analyzing Financial Strategies for Effective Budget Management

The document presents a comprehensive overview of financial strategies essential for effective budget management in organizations. It emphasizes the need to align budgets with business objectives and includes detailed discussions on techniques such as variance analysis and cash flow problem-solving. By examining these methods, the paper highlights how they contribute to better fiscal oversight and operational efficiency. Key components like performance monitoring ensure that actual results are compared against projections, allowing for timely adjustments. Additionally, innovative strategies like beverage sales optimization are suggested to address cash flow issues, thereby enhancing financial stability. The document draws on various scholarly sources, providing a robust theoretical framework supporting these financial management practices.

Running head: PREPARE AND MONITOR BUDGETS
Prepare and Monitor Budgets
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1PREPARE AND MONITOR BUDGETS
Table of Contents
Task 1:.............................................................................................................................................2
Task 2:.............................................................................................................................................6
Task 3:.............................................................................................................................................8
Scenario 1:.......................................................................................................................................8
Scenario 2:.....................................................................................................................................10
Scenario 3:.....................................................................................................................................12
a. Increment in kitchen/Food cost variance:..................................................................................12
b1. Depicting the reports that need to be prepared:.......................................................................12
b2. Depicting the essential authorities that need to be addressed before conducting such matters:
.......................................................................................................................................................13
b3. Suggesting option to address and rectify the issue:.................................................................13
b4. Depicting the ways in which cash flow issue could be addressed:..........................................13
References and Bibliographies:.....................................................................................................14

2PREPARE AND MONITOR BUDGETS
Task 1:
2016 Forecasted
2017
2016 2017
Amount (%) Amount (
%
)
Expenses analysis
Total
Revenue
$
11,212,91
1.92
$
13,294,1
74.35
Room
Budget
COGS $
987,5
55.00
14% $
1,103,
760.0
0
15
%
Rooms
available 63,875
100
% 61,320
96
%
Staff
cost
$
1,201,
980.0
0
17% $
1,471,
680.0
0
20
%
Rooms
occupied 51,548 49,056
Other
expense
s
$
123,4
57.00
1.78% $
588,6
72.00
8%
Total
occupancy
80.70% 80.
70
80% 80 Total
expense
$
2,312,
$
3,164,

3PREPARE AND MONITOR BUDGETS
% % s 992.0
0
112.0
0
Revenue per
available
room
$
134.80
$
150.00
Total room
revenue
$
6,948,670
.40
$
7,358,40
0.00
Total
Catering
revenue
$
4,264,241
.52
$
5,935,77
4.35
Food
budget
Expenses analysis
Total
revenue
$
2,019,370
.53
47
%
$
2,302,72
8.07
39
%
COGS $
601,9
44.02
30% $
690,8
18.42
30
%
Food
Revenue
$
1,740,112
.81
86
%
$
2,001,12
9.73
87
%
Staff
cost
$
1,122,
433.2
4
56% $
1,013,
200.3
5
44
%
Beverage
revenue
$
279,257.7
14
%
$
301,598.
13
%
Other
expense
$
121,7
6% $
161,1
7%

4PREPARE AND MONITOR BUDGETS
2 34 s 42.75 90.96
Banquet
budget
Expenses analysis
Total
revenue
$
1,313,940
.16
$
2,574,98
2.83
COGS $
316,5
64.27
24% $
669,4
95.54
26
%
Food
Revenue
$
876,759.9
5
67
%
$
2,000,00
0.00
78
%
Staff
cost
$
476,5
38.08
36% $
489,2
46.74
19
%
Beverage
revenue
$
183,736.8
3
14
%
$
321,539.
45
12
%
Other
expense
s
$
63,00
9.20
5% $
360,4
97.60
14
%
other
revenue
$
253,443.3
8
19
%
$
253,443.
38
10
%
Room
Service
budget
Expenses analysis
Total
revenue
$
417,442.1
5
$
467,811.
65
COGS $
105,3
45.38
25% $
121,6
31.03
26
%
Food $ 80 $ 83 Staff $ 55% $ 34

5PREPARE AND MONITOR BUDGETS
Revenue 335,796.6
4
% 386,166.
14
% cost 228,3
97.17
159,0
55.96
%
Beverage
revenue
$
34,668.69
8% $
34,668.6
9
7
%
Other
expense
s
$
23,23
3.82
6% $
65,49
3.63
14
%
other
revenue
$
46,976.82
11
%
$
46,976.8
2
10
%
Mini Bar
budget
Expenses analysis
Total
revenue
$
146,471.0
2
$
146,471.
02
COGS $
35,78
1.74
24% $
35,15
3.04
24
%
Beverage
revenue
$
146,471.0
2
100
%
$
146,471.
02
10
0
%
Staff
cost
$
55,51
0.55
38%
other
revenue
Other
expense
s
$
18,89
7.56
13% $
19,04
1.23
13
%
Bar budget Expenses analysis
Total
revenue
$
367,017.6
$
443,780.
COGS $
114,1
31% $
137,5
31

6PREPARE AND MONITOR BUDGETS
6 79 40.20 72.04 %
Food
Revenue
$
67,191.88
18
%
$
83,989.8
5
19
%
Staff
cost
$
151,7
31.13
41% $
159,7
61.08
36
%
Beverage
revenue
$
299,825.7
8
82
%
$
359,790.
94
81
%
Other
expense
s
$
21,90
2.07
6% $
79,88
0.54
18
%
other
revenue
Task 2:
Turno
ver
Customer
numbers
Average
spend (Food)
Food
revenue
Average spend
(Beverage)
Beverage
revenue
Total
Januar
y
1850 $
45.00
$
83,250.0
0
$
9.70
$
17,945.00
$
101,195.
00
Februa
ry
2000 $
37.00
$
74,000.0
0
$
9.70
$
19,400.00
$
93,400.0
0
March 700 $
42.00
$
29,400.0
$
9.70
$
6,790.00
$
36,190.0

7PREPARE AND MONITOR BUDGETS
0 0
April 1200 $
48.00
$
57,600.0
0
$
9.70
$
11,640.00
$
69,240.0
0
May 1200 $
36.50
$
43,800.0
0
$
9.70
$
11,640.00
$
55,440.0
0
June 600 $
35.00
$
21,000.0
0
$
9.70
$
5,820.00
$
26,820.0
0
July 950 $
34.00
$
32,300.0
0
$
9.70
$
9,215.00
$
41,515.0
0
Augus
t
800 $
38.00
$
30,400.0
0
$
9.70
$
7,760.00
$
38,160.0
0
Septe
mber
900 $
29.00
$
26,100.0
0
$
9.70
$
8,730.00
$
34,830.0
0
Octob
er
650 $
29.50
$
19,175.0
0
$
9.70
$
6,305.00
$
25,480.0
0
Nove 980 $ $ $ $ $

8PREPARE AND MONITOR BUDGETS
mber 35.50 34,790.0
0
9.70 9,506.00 44,296.0
0
Dece
mber
2200 $
48.00
$
105,600.
00
$
9.70
$
21,340.00
$
126,940.
00
Total $
557,415.
00
$
136,091.00
$
693,506.
00
Task 3:
Scenario 1:
From the overall evaluation increment in cost of sales can be identified with difference in
evaluation of the prices that will be needed for purchasing the raw materials. The case study
directly indicates that the budget was blown out by 4.5% where expenses incurred by the
restaurant and beverages were relevantly assume the less than what actually happened. From the
valuation it could be identified that the incremental cost of both food and beverages might be
because of the rising prices of raw materials for the restaurant and bar industry. In addition, the
relevant expenses such as cost of food and cost of beverages are relatively increasing, which is in
turn raising the cost of expenses of the restaurant. Moreover, reduction in discounts could mainly
resultant high expenses incurred by the organisation. The third point is mainly addressing the
overall ability of the company to get goods with cash payments. Many suppliers use discounts
for cash payments, which are conducted by organisation. This extensive use of credit facilities by

9PREPARE AND MONITOR BUDGETS
suppliers could eventually increase cost of sales and reduced profits of the organisation (Davids,
Beeres and van 2013).
A first area that needs to be evaluated is the supplier's prices that are quoted to the
organisation. The increment in supplier’s raw material prices could eventually result in risk
expenses for the company. For example, increment in value of the purchases of food materials
such as vegetable and other grain products could directly result in higher cost of purchases for
the restaurant. In addition, the purchase price of beverage at higher prices could also result in
high cost of goods, which might directly affect the budgeted values. Andrews and Ha (2014)
mentioned that due to the increment in demand and low supply capability suppliers tend to raise
the overall prices of proudest, as it help in generating higher income.
The second area that needs to be evaluated is the inflation rate that is currently being
present in the economy. The evaluation of inflation rate could eventually help in protecting the
overall incremental cost of goods, which could lead to increment in sales price. The rising
inflation rate could increase the overall prices of products and raise the Budget variance of the
organisation. For example budgets are mainly prepared by evaluating the overall inflation rate
that could increase value of both sales price and cost incurred by the organisation. However, the
estimation of overall inflation rate could increase budget variance and hamper activities of the
organisation. De Bruin 2014) mentioned that inflation rate could eventually allow the
organisation to estimate the accurate changes in prices that would incur in future.
The third area of evaluation could be conducted regarding cash payment that is been
conducted by the company, the increment in cash payment would eventually allow the
organisation to get relevant discounts and reduce cost of sales. However, the increment in credit

10PREPARE AND MONITOR BUDGETS
purchases could eventually raise cost of sales of the organisation. Therefore, relevant estimation
needs to be conducted regarding discounts that are received by the company.
The fourth areas of investigation need to be conducted on the overall estimation and
requirement of the goods needed by the restaurant for supporting rising demand. The overall low
estimation of goods that will be needed for the increased demand could eventually lead up to the
budget variance situation that is being faced by the organisation (Flageul et al. 2014).
The fifth area that needs to be investigated is the overall forecasting figures that are used
in the budgeting figures, which could directly result in increased variance. Therefore, the
estimation that is made by the analyst in the current budget needs to be evaluated, as they have
left out some points, which needs to be investigated (Hla et al. 2016).
Scenario 2:
The overall five external factors that could contribute to the opposite trend occurrence are
increment in competition, change in preference of consumers, decline in income of consumers,
social media and increase in senior population. These identified external factors could directly
impact the change in trend of the hotel Futura, where their income would decline. Lefeuvre et al.
(2014) mentioned that changing trend for the hotel is relatively an indication of catastrophe, as
the overall revenue might decline forcing the hotel to close down due to high fixed costs. The
scenario directly indicates that relevant decline in trend could eventually reduce revenue, which
intern might hamper financial stability of the hotel. Majority of the hotels have a high fixed cost,
while the variable cost varies as the operations conducted by the employees. There are different
ways in which the overall detection of the external factors could be identified for hotel business.

11PREPARE AND MONITOR BUDGETS
The company mainly needs to address the following actions for identifying the factors affecting
its trend (Lindberg and Vanyushyn 2013).
Evaluation of the competitor’s strength:
The evaluation of overall competitive strength could help in identifying the relevant
impact on trend of the Hotel Futura. This relevant increment could eventually result in declining
sales of the company, while resulting in reduced profitability. The evaluation could also help in
identifying the strengths and weaknesses of the competitors, which could be used by Hotel
Futura for continuing with the trend (Lueg 2015).
Identifying any changes in consumer preference:
The identification consumer preference could be conducted by initiating service of the
consumers that used to use the services of Hotel Futura. This move could eventually allow the
organisation to detect the consumer preference and make adequate changes to its services.
Evaluating the market condition:
The negative impact from declining income of consumers could be identified by
evaluating the market condition and economy. Evaluation of the market condition could be
conducted by seeing the current market indices, which represent capital performance of the
economy.
Evaluating the social media platform:
The evaluation of overall social media platform could also help in identifying the
changing Trend and preference of consumer. This could also help it detecting whether