SITXFIN501 Prepare and monitor budgets
Assessment 3 – Prepare Draft Budget
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ASSESSMENT INSTRUCTIONS
Please complete the student details section.
This Assessment consists of 2 Parts, A and B.
Part A
requires you to complete a draft budget based on information and factors that were determined during an executive meeting at Hotel Futura.
Part B
Requires you to analyse a series of scenarios related to budgets and suggest suitable actions to manage these to industry standards.
This assessment is one form of assessment type that is used to collect evidence and will count towards gaining competence toward this unit.
To demonstrate competence each question must be answered.
If more space is required for any answer then student can attach a separate page containing their name, assessment date, unit title unit code and the assessment task number and attach this page with the current assessment task before submission.
Please note once the assessor has marked your work you will be provided with feedback. Based on the feedback you may be required to address any insufficient aspects that were not covered satisfactorily to demonstrate competence.
You will be required to complete other relevant assessment tasks for this unit.
Evidence Submission
Once you have completed the calculations, save the file and print a copy of the completed Budget sheet and attach this to this assessment as evidence. (Please ensure to put your name, assessment date, unit title and unit code task number on the print out.)
• The electronic copy may be submitted to your trainer as instructed.

PART A
Read the instructions below to perform the calculation in the budget spreadsheet.
Instructions
• You are provided with an excel spread sheet named “Hotel Futura Budget Forecast”. The first tab on this spread sheet is labelled “Departments Small” and shows the existing budget figures for the 2013 financial year.

Your Task
Use the template “Draft Budget” on the second tab of the spreadsheet and perform the calculations below using basic formulas.
Your forecast needs to include the Dollar Figures and the % values for these affected by changes outlined below.
The % values must be listed for each expenses item shown in the Expenses Analysis for each department.
You have met with the department heads of Hotel Futura and the following details have been discussed to prepare your draft budget for 2014:
1. Rooms Division:
a. Due to renovations the rooms available have been reduced to 96%.
b. The forecasted occupancy rate has been adjusted to 80%.
c. The revenue per available room needs to be increased to $150.00
d. The COGS will increase to 15%
e. Staff costs need to be increased to 20% to allow for increases in superannuation and awards.
f. Other Expenses need to increase to 8% to cover electricity price rises.
2. Catering:
a. The food revenue will be increased by 15% due to a new marketing campaign and specialty menus
b. The beverage revenue will increase by 8%.
c. Staff costs need to be adjusted to 44% of the food budget.
d. Other Expenses will need to be increased to 7%.
3. Banquet:
The Banquet Division will be directly affected by the new marketing campaign which has been directed at daytime seminars and corporate functions. For this purpose the kitchen has received specialised equipment including multiple combi steamers, hold-o-mats and sous-vide equipment.
a. The new food revenue budget was set at $ 2,000,000.00 ($2 Million) and the beverage revenue was increased by 75%.
b. The COGS will increase to 26%.
c. The staff costs have been reduced to 19%.
d. Other Expenses will need to increase by 14%.
4. Room Service:
a. The room service revenue from food needs to be increased by 15%.
b. Due to a different system to clear floors and organise delivery, the staff costs will be reduced to 34%.
5. Mini Bar:
The mini bar budget remains unchanged and increased staff costs are absorbed through different processes.
6. Bar Budget:
a. The food revenue budget has been increased by 25% with the implementation of a Tapas Menu.
b. The Beverage Revenue budget has been increased 20% with the introduction of a new cocktail bar and happy hour specials.
c. Staff costs will need to be adjusted to 36%.
d. Other Expenses need to be increased to18%.

Part B
Instructions
Read the following scenarios and answer the questions attached for each scenario.
1. The finance team has created budget forecasts for Hotel Futura based on carefully researched factors for the last 3 years and these were always very accurate. The recent budget which included all departments of the hotel was implemented 3 months ago and the forecasted figures for Food Cost and COGS/Beverages in both, the Restaurant and the Bar Operations have blown out by nearly 4.5 percent.
What could be the reasons for this? List 5 examples of areas you would investigate and explain why.
2. Hotel Futura has successfully operated for 7 years. During this period, overall turnover has doubled, and during the past 3 budget periods annual budgets have been increased by 15% each year which was exceeded each time. During the last 6 months however, management has noticed that the opposite trend seems to become clearly evident now.
List 5 external factors which could contribute to this and explain which methods you would use to determine this.
3. You have successfully negotiated the draft budget with each department head of the Hotel which has now has been approved by the director and implemented 6 weeks ago.
You have finalised the financial data of the Hotel for the next management meeting and noticed the following:
a.
Department Budget Actual Variance
Kitchen/Food Cost 28% 32% (-)$ 13467
b. The recently appointed F&B Manager has purchased 240 bottles of Hill of Blessings @ $90 each which represents a saving of $30 per bottle. However this exceeds the par stock level by 220 bottles and has created a cash flow problem, given the negative performance of the kitchen during this period as well.
I. Which reports would you need to prepare for these issues?
II. Who would be essentially involved when these matters need to be discussed?
III. Suggest options to address and rectify these issues.
IV. How could the cash flow issue be addressed?