SITXFIN003 - Budgeting: Financial Planning and Control Guide.

This assignment focuses on managing finances within a budget, covering various aspects such as budget types, the budget cycle, resource allocation, and the importance of budget control. It delves into comparing actual performance figures with budgeted figures, examining financial records, and understanding financial commitments. Variance analysis, reasons for budget deviations, and strategies for managing them are also discussed. Furthermore, the assignment explores trend analysis for improvement, cost and resource assessment, and methods to enhance expense and payroll management. It concludes with recommendations for improved budget management, emphasizing the importance of considering the impact of changes and effective communication of these recommendations. The assignment also includes a practical task involving a hotel's financial commitments and budget analysis for a bistro, culminating in a report to bistro staff outlining budget status, performance, and necessary adjustments.

Manage finances within a
budget

TABLE OF CONTENT
SECTION 1......................................................................................................................................7
Q1 What is a budget and how does it help a business achieve its goals? ...................................7
Q2 What determines how business funds are divided amongst different departments and
project ?........................................................................................................................................7
Q3What is the difference between a fixed (static) and flexible (variable) budget? ....................7
Q4 What is a cash flow budget and what is it used for? .............................................................7
Q5 What is a profit and loss budget and what is it used for? ......................................................7
Q6 What is a budget cycle?.........................................................................................................7
Q7 What is a budget cycle? ........................................................................................................8
Q8 What must you do when budget priorities are changed? Explain why..................................8
Q9 Your budget allows only a limited amount of funding for wages. Who needs to know about
these types of resource decisions? Explain why..........................................................................8
Q10 List two ways you can promote awareness of the importance of budget control................8
Q11 How does promoting the importance of budget control help you achieve team or work
area goals? (Briefly explain 2 examples).....................................................................................8
Q12 Why is it important to record resource allocation? .............................................................8
Q13 Budgets are not the only source of information relating to where resources are allocated
and controlled within a business. List four other records used to show resource allocation.......8
SECTION 2......................................................................................................................................9
Q1 Why do we record and compare actual performance figures with budgeted figures? ..........9
Q2 How often should you check actual income and expenditure figures against budgets?........9
Q3 List six types of financial records you can use to check income and expenditure
information...................................................................................................................................9
Q4 What is one benefit of using computerised systems to maintain financial records?..............9
Q5 What are financial commitments in a business? ...................................................................9
Q6 List two examples of financial commitments for a business in your industry sector............9
Q7 There are four basic types of expenses you need to record in financial documents to ensure
accurate monitoring. Describe and give one example for each type...........................................9
Q8 What are the formulas used to calculate a budget variance and a budget variance
percentage?................................................................................................................................10

Q9 Check the figures in the sales budget below. Which department’s figures have been
calculated correctly?..................................................................................................................10
Q10 Indicate if the following budget results are a favourable or unfavourable result..............10
Q11 What are the four main reasons budget deviations occur? ................................................10
Q12 What factors do you need to consider when deciding whether or not a budget deviation
should be investigated further? ( Give 3 examples)...................................................................10
Q13 List three options you might consider to help manage budget deviations effectively.......10
Q14 List four types of information about budget targets you should discuss with staff
members.(Briefly explain them)................................................................................................11
SECTION 3....................................................................................................................................11
Q1 How does trend analysis help identify areas for improvement in budget performance? ....11
Q2 What are two questions you should be asking when assessing existing costs and resources?
....................................................................................................................................................11
Q4 What approaches or possible options can you investigate further to control and improve the
management of expenses in a business? (..................................................................................11
Q5 What approaches or possible options can you investigate further to control and improve the
management of payroll expenses in a business?........................................................................12
Q6 List three approaches or possible options you can investigate further to control and
improve the management of accounts payable in a business.....................................................12
Q7 List three main methods businesses use to increase their profits.........................................12
Q8 Providing recommendations for improved budget management and set new budget targets.
....................................................................................................................................................12
Q9 what is the impact of any changes must be considered when developing new approaches
or changes to budget management along with advantages and disadvantages .........................12
Q10 How should you present your recommendations for improved budget management? .....13
Q11 List three examples of the type of information you should include when presenting or
communicating about recommendations for budget management............................................13
SECTION 4....................................................................................................................................13
Q1 What information might you need to include when preparing a statistical or financial report
for the supervisors in a suburban hotel?....................................................................................13

Q2 What information might you need to include when preparing a formal statistical report for
the management team of a large events or reception centre along with example ?.................13
Q3 How can you present reports to enable informed decision-making along with example ?
....................................................................................................................................................14
Q4 How do you know when to complete reports? ...................................................................14
Q5 Explain how the features of accounting software programs can assist you to manage
budgets.......................................................................................................................................15
TASK 1..........................................................................................................................................16
Q1 list the hotel’s financial commitments under their correct cost category. Name at least two
commitments for each category.................................................................................................17
Q2 The four categories of cost in which most fund has been allocated by the hotel along with
June quarter amount ..................................................................................................................17
Q3 Why have significant funds been allocated to these categories? Discuss their importance
to the business and consequences if inadequate funds are allocated.........................................17
Q4 Using the Bistro departmental budget – April. You are holding a team meeting to discuss
the financial targets provided in the organisational and April bistro budgets. What information
do you need to communicate to the team to ensure they understand the targets and goals to be
achieved?....................................................................................................................................18
Q5 What techniques can you use to promote awareness of methods of controlling costs or
increasing sales so you can achieve budget targets?..................................................................18
TASK 2: CALCULATE VARIANCES .......................................................................................18
TASK 3..........................................................................................................................................22
Q1 Are there any significant variances in the sales figures that you should be concerned
about? Explain what the results indicate and why you are/are not concerned about them........22
Q2 Are there significant variances in any of the expenses categories that you think should be
investigated further? If yes, discuss which categories and why you think they need
investigation. If no, discuss why the deviations do not warrant investigation..........................22
Q3 Based on your responses to questions 1 and 2, what is your overall evaluation of the
budget results? Is the bistro meeting its financial targets? .......................................................22
Q4 Which expense category has the most funds allocated to it? Explain why it is important
you manage costs in this category carefully..............................................................................22

Q5 Using the results and information obtained from the April comparative report, your
answers to the previous questions and the background information.........................................23
Write a transcript of the outcomes of your report ready to deliver to the bistro staff at the next
team meeting. ............................................................................................................................23
The transcript should include the following information. The current status of the budget; is
the work area meeting its budget targets, is it on track to meet June quarter budget targets?
Which areas are underperforming or performing better than expected?What changes, if any,
need to be made to help the team meet next month’s budget targets?An outline of budget
targets for May. Organisational factors that contributed to the setting of these targets............23
REFERENCES..............................................................................................................................25

SITXFIN003 – Manage finances within a budget
Worksheets
SECTION 1
Q1 What is a budget and how does it help a business achieve its goals?
Budget is the estimation of the income and expenditure for a given set of time.
Its main purpose is helping a business, government or any other organization for making or
spending money.
Q2 What determines how business funds are divided amongst different departments and project ?
The fund manager is the person who ensures the management of the funds and their division in
the different department as per their needs and requirement for their operations.
Q3What is the difference between a fixed (static) and flexible (variable) budget?
Fixed budget is the plan which is considered to be useful for the single level of sales and also
helpful for the measurement of the activity (Arsani and Sihombing, 2020). However, the variable
budget is the changes which happens in the activity for the level of production units for the static
changes.
Q4 What is a cash flow budget and what is it used for?
Cash flow budget is the estimation of all the cash receipts and all the cash expenditure which is
expected the occurrence during a certain time period. It is used for estimation of monthly or
yearly cash income or expenditure which is well framed items.
Q5 What is a profit and loss budget and what is it used for?
It is a budget which is the summary of the expected income and expected expense which is
prepared for a shorted or a longer period depending on the use of the budget.
Q6 What is a budget cycle?
Financial Vaibliltiy is the ability of the generation of sufficient income for meeting operating
payments.
Profitability is the measurement of the profit of the business relative to its expenses for more
efficiency for realizing more profit as a percentage of its expenses.
Liquidity refers the ease which an asset or security has for the conversion of the ready cash for
affecting the market price.

Q7 What is a budget cycle?
Budget cycle is also known as the life of a budget which is useful from the creation and
preparation to its evaluation.
Q8 What must you do when budget priorities are changed? Explain why.
A comparison needs to be made with the budget and the spending for scrutinizing scope that is
present between the difference. It is essential for the business to understand of the change of
order which affects the costs.
Q9 Your budget allows only a limited amount of funding for wages. Who needs to know about
these types of resource decisions? Explain why.
The fund manager is the individual that is responsible for the management of the amount of fund
that is presented for the wages (Choi and et.al., 2021). This is because it allows the organization
to keep the responsibility with an individual.
Q10 List two ways you can promote awareness of the importance of budget control.
Keeping the budgeting process and the forecasting flexible would help the business in the
management of the organization. Implementation of the rolling forecast and budgets is also a
very effective way of promoting budget control.
Q11 How does promoting the importance of budget control help you achieve team or work area
goals? (Briefly explain 2 examples)
The promotions of budget control helps the business in the achievement of business owner for
the cash flow, reduction of the profits that are helpful for increasing returns on investment
budget. Budgeting is the helpful for success for planning and control of the business.
Q12 Why is it important to record resource allocation?
It is important record resource allocation because of the project management for the providing
the clear picture of the amount for working for the what has not been done.
Q13 Budgets are not the only source of information relating to where resources are allocated and
controlled within a business. List four other records used to show resource allocation
The best practice for the allocation of resource is through the assigning of the best visible for
fitting the first available for resources. It allows the uniform distribution of the skilled resource
which helps the organization in multiple projects for deploying them for high priority.

SECTION 2
Q1 Why do we record and compare actual performance figures with budgeted figures?
Budget figures are compared for starting up a especially understanding of the data of the
business. It helps the organization in better for accurately forecasting the metrics for planning a
realistic budget.
Q2 How often should you check actual income and expenditure figures against budgets?
Checking the income and expenses of the business quarterly helps the business to understand the
details of the net income and profit (Nwaorgu and Alozie, 2017).
Q3 List six types of financial records you can use to check income and expenditure information
 Profit and Loss account
 Cash flow analysis
 Fund flow analysis
 Balance sheet
 Statement of equity
 Income statement
Q4 What is one benefit of using computerised systems to maintain financial records?
The computerized accounting system is helpful for reducing the time that is spent on a manual
process which is directly important for the business in increasing efficiency.
Q5 What are financial commitments in a business?
It is a commitment which is considered to be helpful for the management of the expenses for the
future date. It helps the business finances for giving a date for commitment in pledge towards
paying something.
Q6 List two examples of financial commitments for a business in your industry sector.
Financial commitment is when a purchase order is sent to supplier that helps the organization in
the making a pledge to pay on a specific date.
Q7 There are four basic types of expenses you need to record in financial documents to ensure
accurate monitoring. Describe and give one example for each type.
Cost of goods sold — cost of materials needed for production.
Operating expenses — Wages and Salaries
Non Operating expenses – Interests payment
Financial Expenses – Loan origination fees

Q8 What are the formulas used to calculate a budget variance and a budget variance percentage?
The formula used for budget variance is
(Actual amount spent- budgeted amount)
This provides the budget variances.
The formula for percentage of budget variance is
(Budget variance * 100)/ budget amount.
Q9 Check the figures in the sales budget below. Which department’s figures have been
calculated correctly?
The club bar meals budget variance has been calculated accurate because the correct formula is
used in which the actual amount spent is subtracted from the budgeted amount.
Q10 Indicate if the following budget results are a favourable or unfavourable result.
Actual income is above budget:- Favourable result
Actual income is below budget:- Unfavourable result
Expenses are above budget:- Unfavourable result
Expenses are below budget:- Favourable result
Q11 What are the four main reasons budget deviations occur?
Budget deviation occur because of the following reasons,
 Errors while calculating or preparation of budget.
 Changes in the business conditions can also be the reason for budget deviation.
 Unmet expectations also results in budget deviation.
 Wrong assumptions or relying on a bad data.
Q12 What factors do you need to consider when deciding whether or not a budget deviation
should be investigated further? ( Give 3 examples)
Certain factors which are needed to be considered before the changes in budget deviation are,
 Time delay can be a great issue.
 Source of variance which can created the change (Slyter and et.al., 2017).
 Detailed analysis for understanding the every factor for the change.
Q13 List three options you might consider to help manage budget deviations effectively.
Three best ways in which the budget deviation can be managed are,
 Comparison of the budget with the actual budget for the preparation of budget deviation.
 Identification of relationships for budget deviations.

 Forecasting the changes in the as pattern for getting prepare for the budget deviation.
Q14 List four types of information about budget targets you should discuss with staff members.
(Briefly explain them)
Budget can be used for motivating the employees because it motivates the employees and
managers when they get to know about the incentives, budgeting process, departmental
investment and goals and objective of the budget.
SECTION 3
Q1 How does trend analysis help identify areas for improvement in budget performance?
Trend analysis helps the business in the identification of the improvement in the budget through
the identification of the any consistent results or trends. It is done by understanding the business
and performing the prediction of the current business operations and practices taken by the
organization.
Trend analysis aids to identify the areas which is under performing and giving prediction
to inform decision (Dong, Wang and Zhang, 2021). Budget performance can be properly
evaluated with having proper trend analysis through comparing between two or more period. It
aids in making significant evaluation of lacking areas making proper evaluation.
Q2 What are two questions you should be asking when assessing existing costs and resources?
Questions
a: there is efficient availability of resources to allocate, analyze and control overall functioning?
b: Applied cost can be declined by eliminating irrelevant factors?
Q3When identifying new approaches to budget management, who should you discuss desired
budget outcomes with?
In the business and training environment desired budget outcome should be judged with finance
and resource managers in turn proper evaluation can be done. Budget analyst in the company can
as well be contacted for the mentioned purpose.
Q4 What approaches or possible options can you investigate further to control and improve the
management of expenses in a business? (
For example-
1. cost can be controlled by planning strategically through applying cost accounting system.
2. Effective time management can be exerted to have ensured optimum utilization for
declining cost

3. Tracking cost through job costing method can be implemented for mentioned purpose
4. Variance analysis aids in identifying deviations.
5. Balance score card and bench marking method are as well suitable for specified course
Q5 What approaches or possible options can you investigate further to control and improve the
management of payroll expenses in a business?
For instances-
 Looking at employees listed on payroll
 Analyzing number of employee to avoid duplication
 Confirming tax with holdings, remittance and report for accuracy
 Payroll audit checklist
 Removing terminated employees from payroll
Q6 List three approaches or possible options you can investigate further to control and improve
the management of accounts payable in a business.
 Avoiding costly duplication and late payments
 Declining costs and manual efforts for matching to budget in financial statements.
 Reducing processing cost & time and recording prior and after approval to avoid cost
Q7 List three main methods businesses use to increase their profits.
 Proper declination of cost
 Appropriate estimation of pricing strategy to recover expenses
 Effective marketing & promotion activity to increase revenue
Q8 Providing recommendations for improved budget management and set new budget targets.
Assistant and general accountant of the company can be provided recommendations like proper
allocation & analysing of budget with actual in order to find cause for lacking performance
(D’Atri and et.al., 2019.0. There should be diverse sourcing of fund to decline cost & risk.
Q9 what is the impact of any changes must be considered when developing new approaches or
changes to budget management along with advantages and disadvantages
Customer service- It can benefit by providing quality performance through proper meeting of
objectives. It might negatively affect decision-making by impacting pricing factor.

Staff morale- Budget management can increase morale which can incline opportunity for
personal development. On the others side, disadvantage is danger of flexibility in overall
processing.
Q10 How should you present your recommendations for improved budget management?
 It can be presented by setting realistic expectations in meeting
 Categorizing all the expenses appropriately can help in same purpose
Q11 List three examples of the type of information you should include when presenting or
communicating about recommendations for budget management
Clear goal, benefits and drawbacks should be included with provided recommendations while
communicating.
SECTION 4
Q1 What information might you need to include when preparing a statistical or financial report
for the supervisors in a suburban hotel?
For preparing a statistical or financial report for the supervisors in Suburban hotel much
emphasis should be provided by maintaining accuracy, timelines, materiality, comparability, etc
kinds of features. It should focus on included he company's assets, liabilities, revenue, expenses
and owners equity.
 It should comprise all the expenses incurred for smooth functioning of organization.
 Proper estimation & involvement of earning sources so that accurate and reliable income
can be identified.
 There should be involvement of assets so that proper optimization of resources and
hotel's short term ability to overcome obligation can be identified.
 Liabilities like loan, account payable, etc can be helpful for supervision performance of
mentioned hotel.
 Owners equity like retained earning, share capital, etc contribute in supervising
significant evaluation of liquidity position can be done.
Q2 What information might you need to include when preparing a formal statistical report for the
management team of a large events or reception centre along with example ?
Statistical report provides an objective description of numerical data through comprising trends,
identifying & evaluating alternative course of action, estimate errors, monitoring processes, etc