Leadership Report: Budget Analysis, Financial Rules, and Regulations

This report provides a comprehensive analysis of budget variances, financial management, and company compliance. It includes a detailed profit and sales budget for FY 2018, along with assumptions regarding sales price increases and gross profit. The report examines the actual financial data for e...Read More

ADVANCE DIPLOMA OF LEADERSHIP 1
Student declaration:
To be filled out and submitted with responses
 I declare that this task is all my own work and I have not cheated or plagiarised the
work or colluded with any other student(s)
 I understand that if I am found to have plagiarised, cheated or colluded, action will be
taken according to process explained to me
 I have correctly referenced all resources and reference texts throughout these
assessment tasks
 I understand the rights to re-assessment
 I understand the right to appeal the decisions made in the assessment

ADVANCE DIPLOMA OF LEADERSHIP 2
Contents
Purpose of the report:.................................................................................................................3
Assessment 3:.............................................................................................................................3
Profit and sales budget:...........................................................................................................3
Ensuring no misappropriation of funds:.....................................................................................6
No variance policy:....................................................................................................................6
Due diligence:............................................................................................................................7

ADVANCE DIPLOMA OF LEADERSHIP 3
Purpose of the report:
The main purpose of this report is to analyse the variances between the actual and the budget
data and figures, implement the budgets. Further, this report talks about the various rules and
regulations that each company has to follow and meet when it comes to conducting the
business operations.
Assessment 3:
Part 1 and Part 2:
Profit and sales budget:
The following is the desired budgets for FY 2018:
Quarter Q1 Q2 Q3 Q4 Full
Year
2017
Sales in Units 10.00 2.75 3.03 3.33 3.66 12.76
Selling price/unit 4,725.0
0 4,725.00 4,725.00 4,725.00 4,725.00 4,725.00
Total budget
sales
12,993.7
5
14,293.1
3
15,722.4
4
17,294.6
8
60,303.9
9
Gross profit 5,000.00 5,499.99 6,603.42 7,263.77
23,204.9
8
Assumptions:
 SP increases by 5%
 Gross profit increased by 42% from quarter 3
 Average price of outbound calls and the reporting (1 unit) since 2 years was $4,500

ADVANCE DIPLOMA OF LEADERSHIP 4
(Amounts in $)
Particulars Qtr 1 Qtr 2 Qtr 3 Qtr 4 2018
Sales
26,82,328
.50
34,76,553
.75
32,48,212
.54
41,07,651
.53
135,14,746
.32
Less Cost of goods
Sold
8,31,521
.84
10,77,731
.66
10,06,945
.89
12,73,371
.98
41,89,571
.36
Gross Profit
18,50,806
.67
23,98,822
.09
22,41,266
.65
28,34,279
.56
93,25,174
.96
Expense
Wages
14,42,612
.50
14,42,612
.50
14,42,612
.50
14,42,612
.50
57,70,450
.00
Superannuation
1,37,048
.19
1,37,048
.19
1,37,048
.19
1,37,048
.19
5,48,192
.75
Payroll Tax
39,654
.21
39,654
.21
39,654
.21
39,654
.21
1,58,616
.83
Rent
1,14,750
.00
1,14,750
.00
1,14,750
.00
1,14,750
.00
4,59,000
.00
Advertising
42,000
.00
42,000
.00
42,000
.00
42,000
.00
1,68,000
.00
Repairs
3,289
.50
3,289
.50
3,289
.50
3,289
.50
13,158
.00
Cleaning
13,770
.00
13,770
.00
13,770
.00
13,770
.00
55,080
.00
Utilities
8,937
.75
8,937
.75
8,937
.75
8,937
.75
35,751
.00
Accounting Fees
12,877
.50
12,877
.50
12,877
.50
12,877
.50
51,510
.00
Legal Fees - - - - -
Insurance
16,761
.15
16,761
.15
16,761
.15
16,761
.15
67,044
.60
Interest
3,920
.00
3,920
.00
3,920
.00
3,920
.00
15,680
.00
Depreciation
73,621
.25
73,621
.25
73,621
.25
73,621
.25
2,94,485
.00
Total Expenses
19,09,242
.04
19,09,242
.04
19,09,242
.04
19,09,242
.04
76,36,968
.18
Net Profit Before
Tax
-
58,435.38
4,89,580
.04
3,32,024
.61
9,25,037
.51
16,88,206
.79
Company Tax
-
17,530.61
1,46,874
.01
99,607
.38
2,77,511
.25
5,06,462
.04
Net Profit After
Tax
-
40,904.77
3,42,706
.03
2,32,417
.22
6,47,526
.26
11,81,744
.75

ADVANCE DIPLOMA OF LEADERSHIP 5
Assumptio
ns:
1
Costs subjects to inflation should increase 2%: rent/ repair /
insurance / cleaning / utilities - paid equal parts each quarter
2 Sales grown expect to remain the same as 2015/16 & 2016/17
3 COGS % expected to remain the same
2015-16
Sales 9980100
Less COGS 3106680
0.311287
46
4 Wages increase existing staff 1.9% + $115,000
5 Advertising increase by 12% - paid equal parts each quarter
6 Accounting fees increase by 1% - paid equal parts each quarter
7 Interest 5.6% on $280,000 ($20,000 repaid at end of month)
8 Superannuation - 9.5% of wages each quarter
9 Company tax is 30% of net profit each quarter
10 State payroll tax is 4.85% (when wages exceeds 625,000)
Part 3:
While developing the budget, we had considered the amount of the taxes that would be
required to be paid on the profit earned by the company, an advance will have to be paid in
this respect. Further, FBT may also be applicable, so that also has to be kept in mind. The
company aims at earning a specific % of the profit on sales, the budget has been prepared
keeping that in mind.
Part 4:

ADVANCE DIPLOMA OF LEADERSHIP 6
The budget shall be circulated to each departmental manager and a meeting shall be
scheduled with each one of them so that they know exactly what is expected out of them and
the strict timeliness that they are duty bound to follow. They would be communicated the
practical approach that should be followed for the purposes of meeting these budget
deadlines.
Part 5:
Respected CEO,
Ensuring no misappropriation of funds:
The following procedures have been adopted for the purposes of ensuring that there is no
misappropriation of any funds:
 Adequate internal controls are in place
 There is an adequate segregation of duties so that there is no confusion and there is no
overlapping of work.
 Each departmental manager has been made aware of their respective roles and
responsibilities
No variance policy:
The managers have been communicated effectively with regard to the variance, if any. They
would be punished in case, they are at fault when it comes to the conducting of their roles and
responsibilities. They have been made aware about the ways through which the given budgets
could be met with no major variances. Variances to the tune of 1% are allowed, not above
that. Though the managers have bene informed about no variance policy of the company, we
have kept a buffer of 1% for the circumstances that are beyond control.

ADVANCE DIPLOMA OF LEADERSHIP 7
Due diligence:
Each purchase and sale shall be documented adequately, serially numbered. Each department
shall send the request of purchase to the purchasing department where the purchasing
department shall invite tenders from vendors and the vendor offering the lowest rate would be
given the contract for the year. Their payments shall go through the accounts payable
departments. The respective cash conversion cycle will be maintained.
The above steps would be followed for the sales as well. This would ensure proper audit trail
and each purchase and the sale shall be authorised by the respective or the appropriate head
of the department.
Ay suggestions would be deeply appreciated,
Regards,
Yuan