Advanced Diploma of Leadership & Management: BSBFIM601 Project
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Project
AI Summary
This project, designed for the BSBFIM601 Manage Finances unit, presents a comprehensive analysis of Woolworths Ltd's financial performance. The assessment requires students to examine Woolworths' financial statements, including the Profit and Loss statement, Statement of Cash Flows, and Balance Sheet, to identify key trends and factors impacting revenue, profit, and cash flow. The project delves into specific components affecting revenue, such as petrol sales, and investigates the reasons behind the company's shift from profit to loss between 2015 and 2016. Students are tasked with analyzing the company's growth initiatives, cash flow changes, and the discrepancy between reported loss and reduction in cash. Furthermore, the assessment requires the identification and calculation of financial ratios, examination of accounting policies, and an understanding of the role of auditors and compliance with financial reporting standards. The project also explores Woolworths Ltd's investments in other companies and assesses their impact on the overall financial results, including the contribution of ALH Group Pty Ltd and Hydrox Holdings Pty Ltd. Finally, the project addresses the reasons behind the company's tax expense despite reporting a loss, offering a detailed and practical application of financial management principles.
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BSBFIM601 Manage Finances
Advanced Diploma of Leadership & Management
Module 4 Project 1
Submission Instructions:
Key steps that must be followed:
1. Please complete the Declaration of Authenticity at the bottom of this page.
2. Once you have completed all parts of the assessment and saved it (e.g. to your desktop computer),
login to the Monarch Learning Management System (LMS) to submit your assessment.
3. In the LMS, click on the file” Submit ADLM Module 4 Project” in the Module 4 section of your course
and upload your assessment file/s by following the prompts.
4. Please be sure to click “Continue” after clicking “submit”. This ensures your assessor receives
notification – very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other person’s work has been used without due
acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the
purpose of detecting plagiarism.
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by
the above student declaration.
Advanced Diploma of Leadership & Management
Module 4 Project 1
Submission Instructions:
Key steps that must be followed:
1. Please complete the Declaration of Authenticity at the bottom of this page.
2. Once you have completed all parts of the assessment and saved it (e.g. to your desktop computer),
login to the Monarch Learning Management System (LMS) to submit your assessment.
3. In the LMS, click on the file” Submit ADLM Module 4 Project” in the Module 4 section of your course
and upload your assessment file/s by following the prompts.
4. Please be sure to click “Continue” after clicking “submit”. This ensures your assessor receives
notification – very important!
Declaration of Understanding and Authenticity *
I have read and understood the assessment instructions provided to me in the Learning Management System.
I certify that the attached material is my original work. No other person’s work has been used without due
acknowledgement. I understand that the work submitted may be reproduced and/or communicated for the
purpose of detecting plagiarism.
Student Name*: Date:
* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by
the above student declaration.
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BSBFIM601 Manage Finances
Important assessment information
Aims of this assessment
This assessment task covers the fundamental skills and knowledge required to manage finances in an
organisation. The focus is on budgeting and variance considerations and requires an understanding of cost
behaviour, break even analysis as well as an understanding of basic financial statement ratio analysis.
This assessment uses financial data from Woolworths Ltd as well as some fictional case studies.
Marking and feedback
This project contains 3 assessment activities each containing specific instructions.
This particular assessment forms part of your overall assessment for the following unit of competency:
BSBFIM601 Manage Finances
Grading for this assessment will be deemed “competent” or “not-yet-competent” in line with specified
educational standards under the Australian Qualifications Framework.
What does “competent” mean?
These answers and portfolio evidence contain relevant and accurate information in response to the question/s
and task/s with limited serious errors in fact or application. If incorrect information is contained in an answer,
it must be fundamentally outweighed by the accurate information provided. This will be assessed against a
marking guide provided to assessors for their determination.
What does “not-yet-competent” mean?
This occurs when an assessment does not meet the marking guide standards provided to assessors. These
answers either do not address the question specifically, or are wrong from a legislative perspective, or are
incorrectly applied. Answers that omit to provide a response to any significant issue (where multiple issues
must be addressed in a question) may also be deemed not-yet-competent. Answers that have faulty reasoning,
a poor standard of expression or include plagiarism may also be deemed not-yet-competent. Please note,
additional information regarding Monarch’s plagiarism policy is contained in the Student Information Guide
which can be found here:
What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be given one more
opportunity to re-submit the assessment after consultation with your Trainer/ Assessor. You will know your
assessment is deemed ‘not-yet-competent’ if your grade book in the Monarch LMS says “NYC” after you have
received an email from your assessor advising your assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas deemed
unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting competency after
resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our Complaints &
Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter areas raised in
the question in full as part of the response.
Skill based questions:
Important assessment information
Aims of this assessment
This assessment task covers the fundamental skills and knowledge required to manage finances in an
organisation. The focus is on budgeting and variance considerations and requires an understanding of cost
behaviour, break even analysis as well as an understanding of basic financial statement ratio analysis.
This assessment uses financial data from Woolworths Ltd as well as some fictional case studies.
Marking and feedback
This project contains 3 assessment activities each containing specific instructions.
This particular assessment forms part of your overall assessment for the following unit of competency:
BSBFIM601 Manage Finances
Grading for this assessment will be deemed “competent” or “not-yet-competent” in line with specified
educational standards under the Australian Qualifications Framework.
What does “competent” mean?
These answers and portfolio evidence contain relevant and accurate information in response to the question/s
and task/s with limited serious errors in fact or application. If incorrect information is contained in an answer,
it must be fundamentally outweighed by the accurate information provided. This will be assessed against a
marking guide provided to assessors for their determination.
What does “not-yet-competent” mean?
This occurs when an assessment does not meet the marking guide standards provided to assessors. These
answers either do not address the question specifically, or are wrong from a legislative perspective, or are
incorrectly applied. Answers that omit to provide a response to any significant issue (where multiple issues
must be addressed in a question) may also be deemed not-yet-competent. Answers that have faulty reasoning,
a poor standard of expression or include plagiarism may also be deemed not-yet-competent. Please note,
additional information regarding Monarch’s plagiarism policy is contained in the Student Information Guide
which can be found here:
What happens if you are deemed not-yet-competent?
In the event you do not achieve competency by your assessor on this assessment, you will be given one more
opportunity to re-submit the assessment after consultation with your Trainer/ Assessor. You will know your
assessment is deemed ‘not-yet-competent’ if your grade book in the Monarch LMS says “NYC” after you have
received an email from your assessor advising your assessment has been graded.
Important: It is your responsibility to ensure your assessment resubmission addresses all areas deemed
unsatisfactory by your assessor. Please note, if you are still unsuccessful in meeting competency after
resubmitting your assessment, you will be required to repeat those units.
In the event that you have concerns about the assessment decision then you can refer to our Complaints &
Appeals process also contained within the Student Information Guide.
Expectations from your assessor when answering different types of assessment questions
Knowledge based questions:
A knowledge based question requires you to clearly identify and cover the key subject matter areas raised in
the question in full as part of the response.
Skill based questions:

BSBFIM601 Manage Finances
Where you are asked to write as though you presenting information to others, your answers must show your
ability to:
understand other people’s perspective/views
show empathy
display a professional response appropriate to the context
explain ideas clearly and simply so that others can understand the issues
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to assist you
Where you are asked to write as though you presenting information to others, your answers must show your
ability to:
understand other people’s perspective/views
show empathy
display a professional response appropriate to the context
explain ideas clearly and simply so that others can understand the issues
Good luck
Finally, good luck with your learning and assessments and remember your trainers are here to assist you

BSBFIM601 Manage Finances
Assessment Activity 1
Case Study
Woolworths Ltd
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 11 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment
Assessment Activity 1
Case Study
Woolworths Ltd
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 11 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment
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BSBFIM601 Manage Finances
The Group sales for Woolworths Ltd are provided below
Required:
1. Identify which 2 components had the largest impact on Woolworths Ltd’s revenue between the
financial year 2015 and financial year 2016 indicating if the change in each has been a positive or
negative impact on revenue and therefore profit.
As per the financial report, Petrol sales were $4.6 million for 2016 which was a decrease of 18.1% on the
previous year (volumes decreased by 9.1%). This is a significant negative impact on Woolworth’s Ltds
revenue and profitability.
Between the years 2015 and 2016, there was a noticeable difference in both operating and trading costs
which contribute to a financial loss in 2016. In 2015, Woolworths saw a large profit margin, from gross profit
to EBIT as a result of steady revenue from sales a small loss from discounted operations. In 2016 however,
Woolworths saw sales impacted by a further loss of $3,188M from discounted operations and a decrease of
sales primary driven down by lower sales in Petrol.
2. An extract of Woolworths Ltd’s Profit and Loss is provided below. The full Woolworths Ltd 2016
Annual Report is available to you on the LMS. Examine the report and explain what factors gave rise
to Woolworths Ltd generating a profit in 2015 but a loss in 2016.
The Group sales for Woolworths Ltd are provided below
Required:
1. Identify which 2 components had the largest impact on Woolworths Ltd’s revenue between the
financial year 2015 and financial year 2016 indicating if the change in each has been a positive or
negative impact on revenue and therefore profit.
As per the financial report, Petrol sales were $4.6 million for 2016 which was a decrease of 18.1% on the
previous year (volumes decreased by 9.1%). This is a significant negative impact on Woolworth’s Ltds
revenue and profitability.
Between the years 2015 and 2016, there was a noticeable difference in both operating and trading costs
which contribute to a financial loss in 2016. In 2015, Woolworths saw a large profit margin, from gross profit
to EBIT as a result of steady revenue from sales a small loss from discounted operations. In 2016 however,
Woolworths saw sales impacted by a further loss of $3,188M from discounted operations and a decrease of
sales primary driven down by lower sales in Petrol.
2. An extract of Woolworths Ltd’s Profit and Loss is provided below. The full Woolworths Ltd 2016
Annual Report is available to you on the LMS. Examine the report and explain what factors gave rise
to Woolworths Ltd generating a profit in 2015 but a loss in 2016.

BSBFIM601 Manage Finances
3. Review the Woolworths Ltd business plan (section 2 of the annual report) and describe what growth
initiatives they are planning to their continuing operations in the medium term.
Woolworths Ltd established a medium term (three to five year) target and plan in order to
successful roll out a number of new stores to achieve their growth target.
4. The Statement of Cash Flows for Woolworths Ltd is provided for you below.
3. Review the Woolworths Ltd business plan (section 2 of the annual report) and describe what growth
initiatives they are planning to their continuing operations in the medium term.
Woolworths Ltd established a medium term (three to five year) target and plan in order to
successful roll out a number of new stores to achieve their growth target.
4. The Statement of Cash Flows for Woolworths Ltd is provided for you below.

BSBFIM601 Manage Finances
a. What was the overall change in cash for the financial year 2016 compared to the financial year
2015?
Overall, there was a recorded loss in 2016 of -$377.4M when compared to the overall cash position of
2015.
b. For the 2015 financial year, explain why the change in cash occurred.
The change in cash occurred due to the increase in the cash inflow from the operating activities which was
sufficient in effectively meeting up with the outflow from the investing and financing activities.
c. For the 2016 financial year, explain why the change in cash occurred.
In 2016, there was a decrease in the cash flow from the operating activities while there was a negatively
outflow in the other two activities which resulted int net cash flow to be negative but the organization was
having huge amount of cash and cash equivalent in the beginning of the year which resulted into making
the cash balance positive.
5. In 2016 Woolworths Ltd reported a net loss of $2,347.9 million. The cash generated for this same
period was negative $384.1 million. Provide an explanation as to why the loss for the period is
different to the reduction in cash for the same period.
The loss for the period is different from that of the reduction in the cash balance in the same period which
is because of the reason that the income statement is prepared considering the accrual basis of accounting
while the cash flow statement is prepared using cash basis of accounting which only considers cash in and
out. The income statement accounts for credit sales and purchases while it is not so in the case of cash
flow statement.
6. In the Directors’ Declaration for Woolworths Ltd the Directors declare that in their opinion “there are
reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable”. Name one financial ratio that could confirm this statement and show the
value of that ratio for both 2015 and 2016. (Hint - you will need to access the Balance Sheet).
Name of financial ratio: Debt to Asset Ratio
2015 Calculation = Total debt/ Total assets = $ 14,204.8/$25,336.8 = 0.56
2016 Calculation = Total debt/ Total assets = $ 14,720.3/$23,502.2 = 0.62
The ratio of less 1 indicates that the company owns more assets than its liabilities and can effectively meet
its obligation by selling its assets as and when needed.
a. What was the overall change in cash for the financial year 2016 compared to the financial year
2015?
Overall, there was a recorded loss in 2016 of -$377.4M when compared to the overall cash position of
2015.
b. For the 2015 financial year, explain why the change in cash occurred.
The change in cash occurred due to the increase in the cash inflow from the operating activities which was
sufficient in effectively meeting up with the outflow from the investing and financing activities.
c. For the 2016 financial year, explain why the change in cash occurred.
In 2016, there was a decrease in the cash flow from the operating activities while there was a negatively
outflow in the other two activities which resulted int net cash flow to be negative but the organization was
having huge amount of cash and cash equivalent in the beginning of the year which resulted into making
the cash balance positive.
5. In 2016 Woolworths Ltd reported a net loss of $2,347.9 million. The cash generated for this same
period was negative $384.1 million. Provide an explanation as to why the loss for the period is
different to the reduction in cash for the same period.
The loss for the period is different from that of the reduction in the cash balance in the same period which
is because of the reason that the income statement is prepared considering the accrual basis of accounting
while the cash flow statement is prepared using cash basis of accounting which only considers cash in and
out. The income statement accounts for credit sales and purchases while it is not so in the case of cash
flow statement.
6. In the Directors’ Declaration for Woolworths Ltd the Directors declare that in their opinion “there are
reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable”. Name one financial ratio that could confirm this statement and show the
value of that ratio for both 2015 and 2016. (Hint - you will need to access the Balance Sheet).
Name of financial ratio: Debt to Asset Ratio
2015 Calculation = Total debt/ Total assets = $ 14,204.8/$25,336.8 = 0.56
2016 Calculation = Total debt/ Total assets = $ 14,720.3/$23,502.2 = 0.62
The ratio of less 1 indicates that the company owns more assets than its liabilities and can effectively meet
its obligation by selling its assets as and when needed.
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BSBFIM601 Manage Finances
7. In the Directors’ Declaration for Woolworths Ltd the Directors declare that in their opinion, “the
attached financial statements are in compliance with International Financial Reporting Standards, as
stated in Note 1 to the financial statements” As part of Note 1 which is titled “Significant Accounting
Policies” there are 6 sections that relate to how Woolworths Ltd adheres to the Financial Reporting
Standards. List 4 of these areas.
1. Basics of consolidation
2. Cash and cash equivalents
3. Foreign currency
4. Goods and Services Tax (GST)
8. Which accounting firm were the auditors for Woolworths Ltd?
Deloitte Touch Tohmatsu
9. In the Independent Auditors’ Report, the audit opinion is provided. Which Regulations and Legislation
is referred to in this audit opinion?
In our opinion: (a) the financial report of Woolworths Limited is in accordance with the
Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s
financial position as at 26 June 2016 and of its performance for the financial year ended on
that date; and (ii) complying with Australian Accounting Standards and the Corporations
Regulations 2001; and (b) the consolidated financial statements also comply with
International Financial Reporting Standards as disclosed in the basis of preparation.
10. Note 30 to the financial statements (provided below), show the details of 2 companies that
Woolworths Ltd has part ownership of. The companies ALH Group Pty Ltd and Hydrox Holdings Pty
Ltd whilst not being 100% owned by Woolworths ltd, have had a significant effect on Woolworths
Ltd’s Profit or Loss.
7. In the Directors’ Declaration for Woolworths Ltd the Directors declare that in their opinion, “the
attached financial statements are in compliance with International Financial Reporting Standards, as
stated in Note 1 to the financial statements” As part of Note 1 which is titled “Significant Accounting
Policies” there are 6 sections that relate to how Woolworths Ltd adheres to the Financial Reporting
Standards. List 4 of these areas.
1. Basics of consolidation
2. Cash and cash equivalents
3. Foreign currency
4. Goods and Services Tax (GST)
8. Which accounting firm were the auditors for Woolworths Ltd?
Deloitte Touch Tohmatsu
9. In the Independent Auditors’ Report, the audit opinion is provided. Which Regulations and Legislation
is referred to in this audit opinion?
In our opinion: (a) the financial report of Woolworths Limited is in accordance with the
Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s
financial position as at 26 June 2016 and of its performance for the financial year ended on
that date; and (ii) complying with Australian Accounting Standards and the Corporations
Regulations 2001; and (b) the consolidated financial statements also comply with
International Financial Reporting Standards as disclosed in the basis of preparation.
10. Note 30 to the financial statements (provided below), show the details of 2 companies that
Woolworths Ltd has part ownership of. The companies ALH Group Pty Ltd and Hydrox Holdings Pty
Ltd whilst not being 100% owned by Woolworths ltd, have had a significant effect on Woolworths
Ltd’s Profit or Loss.

BSBFIM601 Manage Finances
a. Describe what each of these companies does (you can use Google).
1. ALH Group Pty Ltd
ALH Group Pty Ltd is a national organisation that operates over 330 licenced venues and over
550 retail liquor outlets including sports bars, bistros, restaurants, cafes nightclubs and
accommodation.
2. Hydrox Holdings Pty Ltd
Hydrox Holdings Pty Ltd is another national organisation that operates home improvement
stores and also engages in the wholesale distribution of hardware goods.
b. Did both of these companies contribute positively to Woolworths Ltd’s profit in 2016? Explain.
ALH Group Pty Ltd, contributed positively to the company as the profit or loss allocated to the
subsidiary is $30.7 million while in case of Hydrox Holdings Pty Ltd is negative which amounted to
$1,149.7 million which is a loss.
11. The Profit and Loss for Woolworths Ltd was provided to you as part of Question 2. The income tax
expense for the financial year 2016 it was $519.5 million. Why did Woolworths Ltd have a tax
expense in 2016 if it also had a loss for the same period of $2,347.9 million? (Hint – you can answer
this by carefully looking at the Profit and Loss Statement).
In the year 2016, the company incurred a profit of $1359.6 million on which the tax is applied which
amounted to $519.5 million and therefore, the net profit after tax reduced to $840.1 million. The loss
of $2,347.9 million stated is due to the discontinuation of the operation which incurred loss after tax
amounting to $3188 million.
a. Describe what each of these companies does (you can use Google).
1. ALH Group Pty Ltd
ALH Group Pty Ltd is a national organisation that operates over 330 licenced venues and over
550 retail liquor outlets including sports bars, bistros, restaurants, cafes nightclubs and
accommodation.
2. Hydrox Holdings Pty Ltd
Hydrox Holdings Pty Ltd is another national organisation that operates home improvement
stores and also engages in the wholesale distribution of hardware goods.
b. Did both of these companies contribute positively to Woolworths Ltd’s profit in 2016? Explain.
ALH Group Pty Ltd, contributed positively to the company as the profit or loss allocated to the
subsidiary is $30.7 million while in case of Hydrox Holdings Pty Ltd is negative which amounted to
$1,149.7 million which is a loss.
11. The Profit and Loss for Woolworths Ltd was provided to you as part of Question 2. The income tax
expense for the financial year 2016 it was $519.5 million. Why did Woolworths Ltd have a tax
expense in 2016 if it also had a loss for the same period of $2,347.9 million? (Hint – you can answer
this by carefully looking at the Profit and Loss Statement).
In the year 2016, the company incurred a profit of $1359.6 million on which the tax is applied which
amounted to $519.5 million and therefore, the net profit after tax reduced to $840.1 million. The loss
of $2,347.9 million stated is due to the discontinuation of the operation which incurred loss after tax
amounting to $3188 million.

BSBFIM601 Manage Finances
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BSBFIM601 Manage Finances
Assessment Activity 2
Analysis
Demo Company
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 3 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment
Assessment Activity 2
Analysis
Demo Company
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 3 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment

BSBFIM601 Manage Finances
The Australian operations of Demo Company has provided the Profit and Loss statement for the 3 months
ending May 2017 below.
Required:
1. Sales for May have improved significantly. Provide 2 reasons as to why the sales figure might have
increased.
There was a significant increase in advertising costs during from the previous month, which could have led
to increased awareness of the company and their services, resulting in increased sales.
Furthermore, the company undertaken the consultation which might have helped it in effectively taking
better decision leading to enhancement in sales in the month of May.
2. Despite the increase in sales between March and May, Demo Company’s May profit is less than it was
in March. Explain why you think this has come about.
Compared to March, May had a significant increase in outstanding operating expenses, which would
have continuously impacted the profit margin. For example, the rent had increased by over $1000 (58%)
in addition to increased motor vehicle expenditures.
The Australian operations of Demo Company has provided the Profit and Loss statement for the 3 months
ending May 2017 below.
Required:
1. Sales for May have improved significantly. Provide 2 reasons as to why the sales figure might have
increased.
There was a significant increase in advertising costs during from the previous month, which could have led
to increased awareness of the company and their services, resulting in increased sales.
Furthermore, the company undertaken the consultation which might have helped it in effectively taking
better decision leading to enhancement in sales in the month of May.
2. Despite the increase in sales between March and May, Demo Company’s May profit is less than it was
in March. Explain why you think this has come about.
Compared to March, May had a significant increase in outstanding operating expenses, which would
have continuously impacted the profit margin. For example, the rent had increased by over $1000 (58%)
in addition to increased motor vehicle expenditures.

BSBFIM601 Manage Finances
All of these operational costs are withdrawn from the profits made in the month of May and therefore
reduce the bottom line.
3. An Aged Receivables report for Demo Company as at 30 June 2017 is provided below. The report
indicates how old the debts are. Amounts listed in this report mean the money customers owe from
sales made on credit terms (debtors or accounts receivables) have not yet been paid to Demo
Company. Demo Company’s credit policy requires credit sales to be settled within 14 days.
a. Are the debtors paying within the timeframe specified in the credit policy terms? Explain.
Looking at the Aged Receivables report for Demo Company as at 30 June 2017, it can be said that some
of its customers are making payment within the time frame while others are not. Customers like Basket
Case, Bayside club, Club land, Marine systems are having due amount only for the month of June and
they do not owe any amount for the previous months. On the other hand, customers like City Limousines
have not made the payment for the month of March and April and also DIISR owes huge amount of
money. Thus, it can be clearly stated that the debtors are not making payment within the timeframe
specified in eth credit policy terms.
b. What proportion of these debts do you think might never be paid? Explain
Based upon the above report, it is expected that the 43.9% of the total outstanding might not be
recovered by the company. It includes the amount owed by City Limousines as it has only paid 60.50
from its total due amount in the month of May and Ridgeway University owe a huge amount of 6,187.50
out of which not a single penny is being repaid. This both constitutes the 43.9% of total receivable
amount.
c. What suggestions could you offer to management about their handling of debtors?
All of these operational costs are withdrawn from the profits made in the month of May and therefore
reduce the bottom line.
3. An Aged Receivables report for Demo Company as at 30 June 2017 is provided below. The report
indicates how old the debts are. Amounts listed in this report mean the money customers owe from
sales made on credit terms (debtors or accounts receivables) have not yet been paid to Demo
Company. Demo Company’s credit policy requires credit sales to be settled within 14 days.
a. Are the debtors paying within the timeframe specified in the credit policy terms? Explain.
Looking at the Aged Receivables report for Demo Company as at 30 June 2017, it can be said that some
of its customers are making payment within the time frame while others are not. Customers like Basket
Case, Bayside club, Club land, Marine systems are having due amount only for the month of June and
they do not owe any amount for the previous months. On the other hand, customers like City Limousines
have not made the payment for the month of March and April and also DIISR owes huge amount of
money. Thus, it can be clearly stated that the debtors are not making payment within the timeframe
specified in eth credit policy terms.
b. What proportion of these debts do you think might never be paid? Explain
Based upon the above report, it is expected that the 43.9% of the total outstanding might not be
recovered by the company. It includes the amount owed by City Limousines as it has only paid 60.50
from its total due amount in the month of May and Ridgeway University owe a huge amount of 6,187.50
out of which not a single penny is being repaid. This both constitutes the 43.9% of total receivable
amount.
c. What suggestions could you offer to management about their handling of debtors?
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BSBFIM601 Manage Finances
It is highly recommended to the management to implement attractive discount strategies which gives
discount to its customers on making payment early. In addition to this, it should provide proper training
to its debt collection team pertaining to effectively collecting the due amount on time.
Assessment Activity 3
Budgeting
Interpretation and calculation
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 6 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment
It is highly recommended to the management to implement attractive discount strategies which gives
discount to its customers on making payment early. In addition to this, it should provide proper training
to its debt collection team pertaining to effectively collecting the due amount on time.
Assessment Activity 3
Budgeting
Interpretation and calculation
Activity instructions to candidates
This is an open book assessment activity.
You are required to read this assessment and answer all 6 questions that follow.
Please ensure you have read “Important assessment information” at the front of this assessment

BSBFIM601 Manage Finances
Question 1
The following budget has been presented to the management team of Silver fox a firm that manufactures
silver frames.
Budget Actual Variance
Sales 600,000 700,000 100,000 F
Less Cost of goods sold 250,000 280,000 30,000 U
Gross profit 350,000 420,000 70,000 F
Less operating expenses
Wages 125,000 140,000 15,000 U
Rent 30,000 30,000 -
Advertising 25,000 30,000 5,000 U
General admin 20,000 15,000 5,000 F
Insurance 5,000 7,000 2,000 U
Consulting 30,000 30,000 -
Other 10,000 13,000 3,000 U
Total operating expenses 245,000 265,000 20,000 U
Profit 105,000 155,000 50,000 F
a. Explain why actual amounts exceeding budget amounts can sometimes be considered as a favourable
variance and sometimes considered an unfavourable variance.
Budget variance is basically the difference between the revenue and expenses in the financial budget in
comparison to the actual costs. In case when the revenue achieved is higher than budgeted one, then it is
termed to be favourable for the organization or vice-versa. The unfavourable variances refer to the situation
when the actual expense exceeds the budgeted expenses which can have a negative impact on the overall
profit of the organization. Like in the above budget, the sales is favourable as it more than the what is
budgeted while the expenses like the wages, advertising, general administration etc. have exceeded the
budgeted amount. Therefore, under one statement, one item can give favourable variance and other can
give unfavourable variance.
b. What explanations could be offered to account for the favourable sales variance.
In respect to the sales variance, it means that the company have received higher-than-expected selling price
on its goods, or it has sold more than expected volume of goods or services which has resulted into increase
in sales. It might be because of fewer competition and aggressive marketing campaigns which resulted into
greater sales.
Question 1
The following budget has been presented to the management team of Silver fox a firm that manufactures
silver frames.
Budget Actual Variance
Sales 600,000 700,000 100,000 F
Less Cost of goods sold 250,000 280,000 30,000 U
Gross profit 350,000 420,000 70,000 F
Less operating expenses
Wages 125,000 140,000 15,000 U
Rent 30,000 30,000 -
Advertising 25,000 30,000 5,000 U
General admin 20,000 15,000 5,000 F
Insurance 5,000 7,000 2,000 U
Consulting 30,000 30,000 -
Other 10,000 13,000 3,000 U
Total operating expenses 245,000 265,000 20,000 U
Profit 105,000 155,000 50,000 F
a. Explain why actual amounts exceeding budget amounts can sometimes be considered as a favourable
variance and sometimes considered an unfavourable variance.
Budget variance is basically the difference between the revenue and expenses in the financial budget in
comparison to the actual costs. In case when the revenue achieved is higher than budgeted one, then it is
termed to be favourable for the organization or vice-versa. The unfavourable variances refer to the situation
when the actual expense exceeds the budgeted expenses which can have a negative impact on the overall
profit of the organization. Like in the above budget, the sales is favourable as it more than the what is
budgeted while the expenses like the wages, advertising, general administration etc. have exceeded the
budgeted amount. Therefore, under one statement, one item can give favourable variance and other can
give unfavourable variance.
b. What explanations could be offered to account for the favourable sales variance.
In respect to the sales variance, it means that the company have received higher-than-expected selling price
on its goods, or it has sold more than expected volume of goods or services which has resulted into increase
in sales. It might be because of fewer competition and aggressive marketing campaigns which resulted into
greater sales.

BSBFIM601 Manage Finances
c. As a manager would you be concerned that the cost of goods sold had an unfavourable variance of
$30,000. Explain.
Yes, it is a point of concern as a manager as the cost of goods sold had an unfavourable variance of $30,000
which is a huge amount. The manager will require to identify the cause behind this huge increase in cost of
goods sold so that corrective measures can be undertaken at the right time so that such situation does not
arise in the future. Failing to identify the cause can have a negative impact over the profits of the company.
d. Provide an example of when a favourable variance could be a concern for management.
A favourable variance can be sometimes is a point of concern for the management for example, in case of
favourable cost variance which mainly occurs when the cost to produce the product is less in comparison to
the budgeted cost. This results into increasing the profits and this favourable variance can be the outcome
of the increased efficiencies in manufacturing. But on the other hand, it might be because of usage of cheap
material which are lower in cost which resulted into reduction in the cost. Thus, this s a point where
management requires to be careful.
Question 2
Traves Company produces one type of machine with the following costs and revenues for the year:
Total revenues $4,200,000
Total fixed costs $1,400,000
Total variable costs $2,800,000
Total units produced and sold 700,000 units
Required:
a. What is the selling price per unit?
$6
b. What is the variable cost per unit?
$4
c. What is the contribution margin per unit?
$2
c. As a manager would you be concerned that the cost of goods sold had an unfavourable variance of
$30,000. Explain.
Yes, it is a point of concern as a manager as the cost of goods sold had an unfavourable variance of $30,000
which is a huge amount. The manager will require to identify the cause behind this huge increase in cost of
goods sold so that corrective measures can be undertaken at the right time so that such situation does not
arise in the future. Failing to identify the cause can have a negative impact over the profits of the company.
d. Provide an example of when a favourable variance could be a concern for management.
A favourable variance can be sometimes is a point of concern for the management for example, in case of
favourable cost variance which mainly occurs when the cost to produce the product is less in comparison to
the budgeted cost. This results into increasing the profits and this favourable variance can be the outcome
of the increased efficiencies in manufacturing. But on the other hand, it might be because of usage of cheap
material which are lower in cost which resulted into reduction in the cost. Thus, this s a point where
management requires to be careful.
Question 2
Traves Company produces one type of machine with the following costs and revenues for the year:
Total revenues $4,200,000
Total fixed costs $1,400,000
Total variable costs $2,800,000
Total units produced and sold 700,000 units
Required:
a. What is the selling price per unit?
$6
b. What is the variable cost per unit?
$4
c. What is the contribution margin per unit?
$2
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BSBFIM601 Manage Finances
d. What is the breakeven point in units?
700,000 units
e. How many units must be sold for Traves to make an operating profit of $1,000,000 for the year?
1,400,000
Question 3
The following is a budget prepared by Jacob’s Gardening (on a cash accounting basis) for the 3 months ending
31 March.
Jan Feb Mar Total
Income
Fees received $80,000 $90,000 $100,000 $270,000
Expenses
Wages 10,000 11,000 12,000 33,000
Office expenses 4,000 4,200 4,800 13,000
Equipment expenses 2,200 2,400 2,600 7,200
Motor vehicle expenses 5,800 5,200 5,000 16,000
Advertising 8,000 9,000 10,000 27,000
Other 3,400 3,600 3,000 10,000
Total Expenses 33,400 35,400 37,400 106,200
Profit 46,600 54,600 62,600 163,800
The following assumptions are used to prepare the April budget by using the March figures:
Fees received are expected to fall by 10%
Wages will rise by 1%
All other expenses will rise by 5%
Required:
a. Using the layout below, complete a budgeted Income Statement for April.
March
(Budgeted)
Expected
Change
April
(Budgeted)
Receipts
Fees received $100,000 -10% $90,000
Payments
Wages 12,000 1% $12,120
Office expenses 4,800 5% $5,040
Equipment expenses 2,600 5% $2,730
Motor vehicle expenses 5,000 5% $5,250
d. What is the breakeven point in units?
700,000 units
e. How many units must be sold for Traves to make an operating profit of $1,000,000 for the year?
1,400,000
Question 3
The following is a budget prepared by Jacob’s Gardening (on a cash accounting basis) for the 3 months ending
31 March.
Jan Feb Mar Total
Income
Fees received $80,000 $90,000 $100,000 $270,000
Expenses
Wages 10,000 11,000 12,000 33,000
Office expenses 4,000 4,200 4,800 13,000
Equipment expenses 2,200 2,400 2,600 7,200
Motor vehicle expenses 5,800 5,200 5,000 16,000
Advertising 8,000 9,000 10,000 27,000
Other 3,400 3,600 3,000 10,000
Total Expenses 33,400 35,400 37,400 106,200
Profit 46,600 54,600 62,600 163,800
The following assumptions are used to prepare the April budget by using the March figures:
Fees received are expected to fall by 10%
Wages will rise by 1%
All other expenses will rise by 5%
Required:
a. Using the layout below, complete a budgeted Income Statement for April.
March
(Budgeted)
Expected
Change
April
(Budgeted)
Receipts
Fees received $100,000 -10% $90,000
Payments
Wages 12,000 1% $12,120
Office expenses 4,800 5% $5,040
Equipment expenses 2,600 5% $2,730
Motor vehicle expenses 5,000 5% $5,250

BSBFIM601 Manage Finances
Advertising 10,000 5% $10,500
Other 3,000 5% $3,150
Total Payments 37,400 $38,790
Profit 62,600 $51,210
b. What can Jacob’s gardening do to improve profits?
In order to improve the profits, Jacob’s gardening should work on identifying the ways of reducing the
expenses as it can be clearly seen that there is a decline in the sales but an increase in the expenses to
nearly 5% which had a huge impact over its profitability. Therefore, it becomes important for the Jacob’s
gardening reduce its expenses or implement marketing strategies to increase its sales or by increasing the
sales price for increasing cash inflow to effectively meet with the expenses and result into increasing profits.
Advertising 10,000 5% $10,500
Other 3,000 5% $3,150
Total Payments 37,400 $38,790
Profit 62,600 $51,210
b. What can Jacob’s gardening do to improve profits?
In order to improve the profits, Jacob’s gardening should work on identifying the ways of reducing the
expenses as it can be clearly seen that there is a decline in the sales but an increase in the expenses to
nearly 5% which had a huge impact over its profitability. Therefore, it becomes important for the Jacob’s
gardening reduce its expenses or implement marketing strategies to increase its sales or by increasing the
sales price for increasing cash inflow to effectively meet with the expenses and result into increasing profits.

BSBFIM601 Manage Finances
Question 4
The following information relates to the business of L & B Computers.
Actual Credit Sales amount to:
March April May
$6,930 $5,390 $2,970
Customers normally pay their debts at the following rate:
• 80% in first month after sale • 20% in second month after sale
Estimated Credit Sales:
June July August
$4,840 $5,610 $4,180
Required: Prepare an Accounts Receivable collections budget, for the months of June, July and
August.
L&B Computers Accounts Receivable Collections Budget
April May June July August
Credit Sales
$ 5390 2970 4840 5610 4180
Collections:
1 month 2376 3872 4488
2 months 1078 594 968
Total
Receipts $ 3454 4466 5456
Question 5
Ridge and Roberts are partners in a small accounting firm. Income and expenses for the year ended 30 June
2016 were:
Fees Income $ 224,000 Marketing Expenses $ 6,900
Other Income 52,000 Other Expenses 2,000
Office Wages 31,000 Insurance 8,800
Office Expenses 9,600 Rent 11,200
For the year ending 30 June 2017, budgets are to be based on the following:
• Fees income is expected to rise by 9%.
• Other income is expected to rise by 3%.
• Office expenses, Office wages, and Other Expenses will rise by 2%.
Question 4
The following information relates to the business of L & B Computers.
Actual Credit Sales amount to:
March April May
$6,930 $5,390 $2,970
Customers normally pay their debts at the following rate:
• 80% in first month after sale • 20% in second month after sale
Estimated Credit Sales:
June July August
$4,840 $5,610 $4,180
Required: Prepare an Accounts Receivable collections budget, for the months of June, July and
August.
L&B Computers Accounts Receivable Collections Budget
April May June July August
Credit Sales
$ 5390 2970 4840 5610 4180
Collections:
1 month 2376 3872 4488
2 months 1078 594 968
Total
Receipts $ 3454 4466 5456
Question 5
Ridge and Roberts are partners in a small accounting firm. Income and expenses for the year ended 30 June
2016 were:
Fees Income $ 224,000 Marketing Expenses $ 6,900
Other Income 52,000 Other Expenses 2,000
Office Wages 31,000 Insurance 8,800
Office Expenses 9,600 Rent 11,200
For the year ending 30 June 2017, budgets are to be based on the following:
• Fees income is expected to rise by 9%.
• Other income is expected to rise by 3%.
• Office expenses, Office wages, and Other Expenses will rise by 2%.
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BSBFIM601 Manage Finances
• Insurance will rise by 6%.
• Rent will rise by 3%.
• Marketing expenses will rise by 7%.
Required: Prepare the Income Statement for year ended 30 June 2016 and prepare a budgeted Income
Statement for the year ending 30 June 2017.
Income Statement 2016 Budgeted Income Statement 2017
$ $ Increase % $ $
Fees Income $224,000 9% $244,160
Other Income $52,000 3% $53,560
Total Income $276,000 $297,720
Less Expenses:
Office wages $31,000 2% $31,620
Office Expenses $9,600 2% $9,792
Marketing Expenses $6,900 7% $7,383
Other Expenses $2,000 2% $2,040
Insurance $8,800 6% $9,328
Rent $11,200 $69,500 3% $11,536 $71,699
Net Profit $206,500 $226,021
Question 6
Bond Ltd produces a single product which it sells for $100.00 per unit.
The product requires $45.00 per unit in variable costs to produce and sell, and fixed costs per annum are
$1,100,000.
Determine:
a) The dollar sales necessary to break even. (Show your workings)
Selling price per unit = $100
Variable cost per unit = $45
Contribution margin unit = $100-$45 = $55
Contribution margin ratio = $55 /$100 = 55%
Fixed cost per annum = $1,100,000
Dollar sales necessary to break even = $1,100,000/ 55% = $2,000,000
b) Determine the Profit or loss if 18,000 units (Pessimistic) or 22,000 units (Optimistic) are sold.
Projected Income Statement
18,000 Units 22,000 Units
Sales revenue $1,800,000 $2,200,000
• Insurance will rise by 6%.
• Rent will rise by 3%.
• Marketing expenses will rise by 7%.
Required: Prepare the Income Statement for year ended 30 June 2016 and prepare a budgeted Income
Statement for the year ending 30 June 2017.
Income Statement 2016 Budgeted Income Statement 2017
$ $ Increase % $ $
Fees Income $224,000 9% $244,160
Other Income $52,000 3% $53,560
Total Income $276,000 $297,720
Less Expenses:
Office wages $31,000 2% $31,620
Office Expenses $9,600 2% $9,792
Marketing Expenses $6,900 7% $7,383
Other Expenses $2,000 2% $2,040
Insurance $8,800 6% $9,328
Rent $11,200 $69,500 3% $11,536 $71,699
Net Profit $206,500 $226,021
Question 6
Bond Ltd produces a single product which it sells for $100.00 per unit.
The product requires $45.00 per unit in variable costs to produce and sell, and fixed costs per annum are
$1,100,000.
Determine:
a) The dollar sales necessary to break even. (Show your workings)
Selling price per unit = $100
Variable cost per unit = $45
Contribution margin unit = $100-$45 = $55
Contribution margin ratio = $55 /$100 = 55%
Fixed cost per annum = $1,100,000
Dollar sales necessary to break even = $1,100,000/ 55% = $2,000,000
b) Determine the Profit or loss if 18,000 units (Pessimistic) or 22,000 units (Optimistic) are sold.
Projected Income Statement
18,000 Units 22,000 Units
Sales revenue $1,800,000 $2,200,000

BSBFIM601 Manage Finances
Less: Variable costs $910,000 $990,000
Contribution Margin $990,000 $1,210,000
Less Fixed costs $1,100,000 $1,100,000
Profit (Loss) before tax $ -110,000 $ 110,000
Less: Variable costs $910,000 $990,000
Contribution Margin $990,000 $1,210,000
Less Fixed costs $1,100,000 $1,100,000
Profit (Loss) before tax $ -110,000 $ 110,000
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