BSBFIM501 Manage budget and financial plans

By May 19, 2018Academic Papers

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Monitor and control finances

Performance objective

The candidate will demonstrate the ability to monitor and control finances.

Assessment description

In response to the scenario provided, you will create a simple spreadsheet budget to capture monitoring information. Using information provided to you by your assessor, you will then use the budget spreadsheet to produce a report on expenditure in accordance with organisational policies and procedures. You will also modify a contingency plan.

Procedure

     1.     Read through the scenario provided in Appendix 1 to this assessment task and tasks A and B.

     2.     Design and develop a spreadsheet to capture budgeted and actual figures to produce a variance report.

     3.     Access actual budget figures from relevant managers and accounting systems (assessor).

     4.     Monitor and record actual figures.

     5.     Consider feedback from team members.

     6.     Produce a variance report as per organisational requirements.

     7.     Consider the scenario information and contingency plan provided and analyse the variance report.

     8.     Modify the contingency and implementation plans provided in the scenario to improve effectiveness.

     9.     Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.


 

Specifications

You must provide:

    a budget variance report

    a modified contingency plan and modified implementation plan

    your notes on procedures.

Your assessor will be looking for:

    numeracy skills to read and understand a budget and to produce a variance report

    technology skills to use software associated with financial recordkeeping

    knowledge of basic accounting principles to identify and use account balances

    knowledge of organisational requirements related to financial management

    knowledge of organisational requirements for records and reports

    knowledge of principles and techniques involved in budgeting, profit and loss statements, electronic spreadsheets.

Adjustment for distance-based learners

    No variation of the task is required.

    A follow-up interview may be required (at the discretion of the assessor).

    Documentation can be submitted electronically or posted in the mail.


 

Appendix 1 – Scenario

Big Red Bicycle Pty Ltd is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.

The senior management structure of the company appears below.

Person

Position

Michelle Yeo

Chief Executive Officer (CEO)

Tom Copeland

Managing Director

John Black

Chief Financial Officer (CFO)

Stuart LaRoux

Operations General Manager

Pat Roberts

Senior Accountant

Sam Gellar

Sales General Manager

Charles Pierce

Production Manager

Holly Burke

HR Manager

According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:

    poor sales due to economic downturn

    increases in expenses such as wage expenses.

In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.

Role

You are the Senior Accountant at Big Red Bicycle. A major component of your role is setting budgets and monitoring budgetary performance for the organisation.

Task A

The Managing Director, Tom Copeland, has asked you to implement a process to monitor expenditure and income. He has asked you to prepare a spreadsheet to capture and compare actual income and expenditure to budgeted figures. Your spreadsheet must contain columns for each of the four quarters of the financial year. You are required to gather data from the relevant managers (your assessor) to complete a budget variance report.

The report should conform to organisational requirements in policies and procedures
and contain:

    columns to show actual account values

    absolute variance

    percentage variance.

Task B

It has come to the attention of the Managing Director, Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by midway through the second quarter (Q2), when sales data for the company’s product are in.

Consider the contingency plan and the implementation plan for the contingency below. You have already implemented a portion of the contingency plan, namely the monitoring of budget performance in the variance report you have prepared. You should now analyse the report to determine the effectiveness of the contingency plan and its implementation.

You have received the following feedback from team members:

    Full-time workers and sales people are resentful of time wasting and distracting contract employees.

    Overtime not used but employees resentful of suggestion it might not be approved if needed.

    Training suited the needs of many sales team members but was not relevant to about half the team members.

    Sales team members were happy with the incentives program and tried hard to make sales in the third quarter (Q3); however, they were also resentful at the threatening tone of emails and soon lost enthusiasm.

    Effect of one-day training wearing off.

    Fifty percent of direct wages costs are attributable to short-term contract employees whose contracts have expired and who are no longer needed.

    Employees concerned about lack of attention paid to wastage: water; electricity: paper; raw materials.

    Employees feel left out of budgetary decision-making in general.

The Managing Director would like you to submit a revised contingency plan and contingency implementation plan to bring income and expenses under more
effective control.

Contingency plan for Task B