RECENT ASSIGNMENT

COMPLETE ASSESSMENT DOCUMENT
BSB51107 Diploma of Management
BSBFIM501A Manage budgets and financial plans
The following assessments are to be
(a) completed and
(b) submitted
in accordance with the associated
STANDARD INSTRUCTIONS
ASSESSMENT COVER SHEET
REQUIRED SKILLS AND KNOWLEDGE
This section describes the skills and knowledge required for this unit.
Required skills
• numeracy skills to read and understand a budget and to update a budget
• technology skills to use software associated with financial record keeping.
Required knowledge
• basic accounting principles
• organisational requirements related to financial management
• relevant legislation and current requirements of the Australian Taxation Office, including GST
• requirements for organisational record keeping and auditing • principles and techniques involved in:
• budgeting
• cash flows
• electronic spreadsheets
• GST
• ledgers and financial statements • profit and loss statements.
Plan financial management approaches
The candidate will demonstrate the ability to plan financial management approaches.
Assessment description
In response to the scenario provided, you will clarify budget plans with your manager and negotiate changes to the budget. You will then identify and analyse a risk to the budget and prepare a contingency plan to prevent or minimise the risk.
Specifications You must:
? provide a contingency plan.
Your assessor will be looking for:
? numeracy skills to read and understand a budget and negotiate budget re-allocations
? knowledge of basic accounting principles to identify and use account balances
? knowledge organisational requirements related to financial management such as contained in organisational policies and procedures
? knowledge of principles and techniques involved in budgeting.
Adjustment for distance-based learners ? No variation of the task is required.
? Documentation can be submitted electronically or posted in the mail.
Procedure
1. Read through the Case study (Appendix 1 of this document) and the scenario provided (Appendix 2 of this document) including tasks A and B.
2. Prepare to meet with your manager to clarify budget and negotiate changes:
a. identify areas of the budget that are not achievable, inaccurate or unclear
b. prepare to negotiate necessary changes to the budget
c. set up a time with your manager to meet.
3. Meet with your manager to clarify budget and negotiate changes.
a. identify at least two issues for clarification
b. negotiate at least two changes.
4. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
Implement financial management approaches
The candidate will demonstrate the ability to implement financial management approaches. Specifications You must:
? submit coaching/training plan.
Your assessor will be looking for:
? numeracy skills to read and understand a budget and to communicate a budget
? technology skills to use software associated with financial record keeping
? knowledge of basic accounting principles to identify and use account balances in communication and training
? knowledge of organisational requirements related to financial management such as contained in organisational policies and procedures
? requirements for organisational record keeping and auditing with respect to petty cash
? knowledge principles and techniques involved in budgeting and electronic spreadsheets.
Adjustment for distance-based learners ? No variation of the task is required.
? Documentation can be submitted electronically or posted in the mail.
Assessment description
In response to the scenario provided, you will access and communicate details of budget to a team member (assessor). You will then support the team member to perform their required role with respect to software resources and systems.
Procedure
1. Consider the situation established in Assessment Part A and in Appendix 3 of this document.
2. Prepare to meet with your team member to communicate budget and then coach and train them in new role:
a. access required budget information
b. determine organisational needs
c. identify coaching/training needs of team member
d. plan coaching/ training session:
i. Outcome : produces spreadsheet to management requirements
ii. Include activities/elements to instruct, practice, test, motivate
e. Set up a time with your team member to have coaching/training session
3. Prepare and submit the communication/training plan you would use to coach them your team member in the role:
a. Explain budget and relevance to team member’s accountabilities
b. Use appropriate coaching techniques or models such as grow
c. Use appropriate motivational theory
d. Train learner in required spreadsheet techniques. Include elements of instruction, practice and testing/feedback
Monitor and control finances
The candidate will demonstrate the ability to monitor and control finances.
Specifications
You must provide:
? a spreadsheet of the Financial Performance as at 31st December 2012 showing the budget, the contingency budget, the actual and the variance ($ amount, %, and whether the variation is favourable or unfavourable) per account and per quarter. The spreadsheet must show this detail.
? An updated contingency plan {what else would you do} based on sales not improving.
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 record-keeping
? 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.
Assessment description
In response to the scenario provided, you will create a simple spreadsheet budget to capture monitoring information. Using the information already provided to you, you will then use the budget spreadsheet to produce a report on expenditure in accordance with organisational policies and procedures. You will also use modified contingency plan.
Procedure
1. Read through the Appendices 1, 2 and 4.
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.
4. Monitor and record actual figures.
5. Produce a variance report as per organisational requirements.
6. Consider the scenario information and contingency plan provided and analyse the variance report.
7. Modify the contingency and implementation plans provided in the scenario to improve effectiveness.
8. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
Assessment Part D Review and evaluate financial management processes
Performance objective
The candidate will demonstrate the ability to review and evaluate financial management processes. Specifications You must:
? provide responses to the four activities provided in Procedure.
Your assessor will be looking for:
? numeracy skills to read and understand a budget and perform cost accounting calculations
? knowledge of basic accounting principles to identify and use account balances
? knowledge of organisational requirements related to financial management
? knowledge of current requirements of the Australian Taxation Office with respect to GST ? knowledge of principles and techniques involved in:
? budgeting
? cash flows
? electronic spreadsheets
? GST
? ledgers and financial statements ? profit and loss statements.
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.
Assessment description
Using the scenario information supplied, you will respond to a number of scenario tasks. You will collect and analyse financial data and make recommendations to improve existing processes. You will also create a plan to implement and monitor solutions.
Procedure
1. Consider the four scenario activities below along with the scenario background information and financial information contained in the appendices of this assessment task.
2. Provide written responses to the following four scenario activities.
3. Submit a document containing your responses to your assessor as per the specifications outlined below. Ensure you keep a copy of all work submitted for your records.
Activity 1
Complete the following.
1. Review the Statement of Financial Performance in the appendices to calculate:
a. The average debtor days _________________
b. The average creditor days _________________
c. The average stock turnover ________________
d. Show calculations and results on your response document for this assessment task.
2. Consider the existing BRB ageing debtor’s budget. On your response document, make two written recommendations for improvement to existing financial management processes to improve cash flow. To support your recommendations, refer to data sources, organisational needs, and analytical techniques, for example:
a. statement of financial performance
b. ledger accounts
c. scenario information
d. ageing debtors budget
e. ratios.
3. On your response document, list three sources of information of use to complete this activity.
The following additional information may be relevant.
One risk to the strategic plans of Big Red Bicycle (BRB) is bad debt and poor cash flow due to large trade debtors balances. Big Red Bicycles
? offers 30 day terms to debtors (according to its policies),
? does not train sales staff on credit terms
? has no enforcement of credit terms
? has expensive current leased premises for warehousing of stock
? has exacerbated the problem of waste expense as many bicycles need to be thrown out if parts rust.
You have the following information from the Statement of Financial Position and current ledger accounts in the electronic accounting system (MYOB AccountRight).
ACCOUNT $
Trade debtors 362,500
Trade creditors 80,000
Opening stock 100,000
Closing stock 300,000
Purchases 1,000,000
Activity 2
Complete the following.
1. On your response document, work out:
a. how many units at current variable cost would need to be produced to achieve profit target (show calculations)
b. what the variable costs per unit would need to be to achieve profit target at current manufacturing capacity (show calculations).
2. On your response document, make one written recommendation based on your analysis. To support your recommendation ensure you refer to the organisational needs or situation, and any analytical techniques used. You may also suggest possible actions for BRB to take depending on possible future scenarios.
1. On your response document, list three sources of information of possible use to complete this activity.
The following additional information may be relevant.
Big Red Bicycles is considering manufacturing a new range of cheaper bicycles in Indonesia in addition to its Australian business.
? the Indonesian plant has capacity to manufacture 8000 units
? Big Red Bicycle’s strategic goal is to generate a pretax profit of $1,000,000 for the next financial year for Indonesian operations
? clients will pay a maximum of $500 per bicycle
? possibility exists for move to Indian plant with capacity for 10,000 units
? market for bicycles is growing rapidly and BRB will be able to sell everything produced
? limited ability to renegotiate costs with suppliers ? pricing and cost information is as follows.
Bicycle price per unit $500 (ex GST)
Current variable costs per unit $250
Fixed costs $1,280,000
Activity 3
1. State how many years you will need to keep GST records in order to satisfy ATO requirements.
2. Complete the GST budget on the following page to anticipate GST liability.
JULY AUGUST SEPTEMBER
Budgeted cash receipts incurring GST:
Cash sales 20,000 10,000 10,000
Cash revenue (besides sales) 0 0 0
Cash receipts from sale of assets (not stock) 0 0 0
Total receipts for GST 20,000 10,000 10,000
Budgeted non-cash receipts incurring GST:
Debtors sales 180,000 230,000 150,000
Total non-cash receipts: 180,000 230,000 150,000
Total budgeted receipts incurring GST 200,000 240,000 160,000
Budgeted cash payments incurring GST
Cash purchases of stock 0 0 0
Cash expenses 4,300 5,200 5,250
Total cash receipts incurring GST 4,300 5,200 5,250
Budgeted credit payments incurring
GST
Credit purchases of stock incurring GST 25,000 30,000 25,000
Credit purchases of assets (besides stock) 4,300 5,200 5,250
Total cash payments incurring GST 29,300 35,200 30,250
Total budgeted cash payments incurring
GST 33,600 40,400 35,500
GST cash budget calculations
a) Cash receipts
b) Cash payments
c) GST liability
Activity 4
Choose one of the recommendations from Activity 1 or 2 and develop an action plan to implement and monitor the recommendation. Ensure you include appropriate activities, monitoring, timelines and accountabilities.
Appendix 1 – Case Study - Big Red Bicycle
Big Red Bicycle is a bicycle manufacturer based in Bendigo Victoria. The company produces bicycles which it sells to retailers for on-sale in the domestic Australian market.
The senior management structure of the company appears below:
PERSON POSITION
Michelle Yeo CEO
Tom Copeland Managing Director
John Black 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.
Budgeting and finance policy
Budget preparations
? The business plan will set the key parameters for all financial budgeting.
? Variations to the business plan must be approved by the CEO and senior management strategic committee.
? Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.
? The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and finance manager.
? A CAPEX budget will be developed from the approved business plan.
? A detailed sales budget must be completed before completing the profit budget for the year.
? A cash-flow budget covering the first three months will be prepared after the profit budget is completed.
? A master budget including profit projections will be completed from which cost centre allocations will be made.
? Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available on a separate document. Where possible, the notes should justify the basis on which the estimates were made.
? Overheads (non-direct expenses) will be apportioned across the cost centres equally.
Exceptions need to be negotiated with relevant authorities.
? All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
? The financial cycle for budgeting purposes will be yearly ending 30 June.
Reporting requirements
Software applications to be used in reporting.
? environment – Windows
? accounting Information System – BRB will use MYOB AccountRight plus ? data analysis – BRB will use Microsoft Excel 2007.
Actual results will be produced monthly by the MYOB accounting system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.
Financial delegations
? Each manager is responsible for achieving the revenue budgets agreed to in the budget committee.
? Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
? Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
? name of the person who prepared it
? cost centre (if applicable)
? name of the budget/report, i.e. sales, expenses, CAPEX, cash flow, budget variation ? period of the budget.
FINANCIALS
Sales cost centre expense budget
SALES CENTRE A SALES CENTRE B SALES CENTRE C
Commissions $20,000 $20,000 $20,000
Wages $100,000 $100,000 $100,000
Telephone $3,000 $3,000 $3,000
Office supplies $1,000 $1,000 $1,000
Ageing Debtors budget
AGED DEBTORS BUDGET
2011/12 TOTAL QTR 1 QTR 2 QTR 3 QTR 4
Sales 2,900,000 600,000 900,000 800,000 600,000
% Debtors Sales 50% 50% 50% 50%
Total Debtors 100% 300,000 450,000 400,000 300,000
Current 65% 195,000 292,500 260,000 195,000
30 Days 20% 60,000 90,000 80,000 60,000
60 Days 12% 36,000 54,000 48,000 36,000
90 Days 3% 9,000 13,500 12,000 9,000
Master budget with profit projections
Big Red Bicycle Pty Ltd
Master Budget FY 2011/2012
FY Q1 Q2 Q3 Q4
REVENUE
Commissions (2% sales) 60,000 15,000 15,000 15,000 15,000
Direct wages fixed 200,000 50,000 50,000 50,000 50,000
Sales 3,000,000 750,000 750,000 750,000 750,000
Cost of Goods Sold 400,000 100,000 100,000 100,000 100,000
Gross Profit
2,340,000 585,000 585,000 585,000 585,000
EXPENSES
General & Administrative Expenses
Accounting fees 20,000 5,000 5,000 5,000 5,000
Legal fees 5,000 1,250 1,250 1,250 1,250
Bank charges 600 150 150 150 150
Office supplies 5,000 1,250 1,250 1,250 1,250
Postage & printing 400 100 100 100 100
Dues & subscriptions 500 125 125 125 125
Telephone 10,000 2,500 2,500 2,500 2,500
Repairs & maintenance 50,000 12,500 12,500 12,500 12,500
Payroll tax 25,000 6,250 6,250 6,250 6,250
Marketing Expenses
Advertising 200,000 50,000 50,000 50,000 50,000
Employment Expenses
Superannuation 45,000 11,250 11,250 11,250 11,250
Wages & salaries 500,000 125,000 125,000 125,000 125,000
Staff amenities 20,000 5,000 5,000 5,000 5,000
Occupancy Costs
Electricity 40,000 10,000 10,000 10,000 10,000
Insurance 100,000 25,000 25,000 25,000 25,000
Rates 100,000 25,000 25,000 25,000 25,000
Rent 200,000 50,000 50,000 50,000 50,000
Water 30,000 7,500 7,500 7,500 7,500
Waste removal 50,000 12,500 12,500 12,500 12,500
TOTAL EXPENSES 1,401,500 350,375 350,375 350,375 350,375
NET PROFIT (BEFORE INTEREST & TAX) 938,500 234,625 234,625 234,625 234,625
Income Tax Expense (25%Net) 234,625 58,656 58,656 58,656 58,656
NET PROFIT AFTER TAX 703,875 175,969 175,969 175,969 175,969
Statement of Financial Performance
Big Red Bicycle
For the year ended 30 June 2 012
REVENUE
Sales 2,900,000
Less direct wages and Commissions 272,500
Opening stock 100,000
Purchases 300,000
Closing stock 20,000
Less cost of goods sold 380,000
Gross Profit 2,247,500
EXPENSES
General & Administrative Expenses
Travel 22,000
Legal fees 4,500
Bank charges 700
Office supplies 4,000
Postage & printing 500
Dues & subscriptions 600
Telephone 11,200
Repairs & maintenance 45,000
Payroll tax 25,000
Marketing Expenses
Advertising 208,000
Employment Expenses
Superannuation 45,000
Wages & salaries 500,000
Staff amenities 23,000
Occupancy Costs
Electricity 38,000
Insurance 100000
Rates 100,000
Rent 200,000
Water 35,000
Waste Removal 60,000
TOTAL EXPENSES 1,422,500
NET PROFIT (BEFORE INTEREST & TAX) 825,000
Income Tax Expense 206,250
NET PROFIT AFTER TAX 618,750
Appendix 2 Scenario – SALES Manager
Role
You are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect the both the needs and importance to the business of Cost Centre A.
Task A
The Sales General Manager, Sam Gellar has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the budget projections are achievable, accurate, understandable and fair.
She would like you to look closely at the budget for your cost centre, note any changes you think are necessary, develop an argument for the changes and negotiate those changes.
Information you are aware of includes:
? Sales in the first quarter (Q1), second quarter (Q2), and the fourth quarter (Q4) are generally 30% less than Q2.
? Sales in Q2 depend on completion of 90% of repair and maintenance.
? Commission negotiated with members of the sales team is now at 2.5%.
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 mid Q2, when sales data for the company’s product are in.
As a special project, the managing director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%.
As per organisational policy you should use the contingency plan template provided.
Appendix 3 Training
Role
You are the manager of Sales Team A. You manage a small team of sales team members. Your duties include accessing budget information for your team, explaining relevant aspects of budgets and features of budget documents to your team, and supporting team members to achieve performance goals.
Task A
You have determined that you will need to access budget information from the Senior Accountant to explain to your team. You will explain the overall financial objective of the business, provide an overview of the budget and explain how the budget translates to expense allocations for the team.
Task B
You have determined that one team member, Bill Goodale, will be responsible for tracking expenses and petty cash throughout the financial year. To meet organisational needs, this duty will need to be performed in accordance with policies and procedures.
You have determined that expenses will need to be divided equally and tracked by quarter. Bill will need to develop a spreadsheet to keep track of actual expenditure by account. To help you control expenses, the spreadsheet will need to provide an ongoing tally of expense by account.
Bill’s skills include basic accounting. Bill needs to be informed of Big Red Bicycle policies and procedures for petty cash. Bill is familiar with Microsoft Excel but does not know how to use formula and functions to sum columns or rows of figures.
Appendix 4 Implement and advancing the contingency
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 variation report you have prepared. The Q2 results have just become available with sales for the past 2 quarters 20% below budget. You should now analyse the report to determine the effectiveness of the contingency plan and its implementation.
RISK IDENTIFIED: PROFIT FOR FY BELOW 90% OF BUDGET
ACTIVITY MONITORING ACTIVITY AND DATE PERSON/S
Monitor variance. Completion of report: Q2. PR
Analysis of report to identify issues. Management report: Q2. PR
Email to warn employees of risk to jobs. Monitoring of variation report results: Q4. PR
Email to announce rise of commission from 2% to 2.5%. Monitoring of variation report results: Q3. PR
Email to inform employees that overtime will no longer be approved. Monitoring of variation report results: Q3. PR
Email to inform employees of mandatory sales skills training: set program. Monitoring of variation report results: Q3. PR
Mandatory training conducted. Monitoring of variation report results: Q3. PR
You have received the following feedback from team members:
? full-time workers and sales people 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
? 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
? 50 percent of direct wages costs are attributable to short-term contract employees whose contracts expired at the end of Q1 and were 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 obtain a copy of the current Statement of Financial Position
(including variations etc) and then submit a revised contingency plan if sales do not return to budget.
Contingency plan for Task B
CONTINGENCY PLAN
Company name: Big Red Bicycle Pty Ltd Person developing the plan:
Name : Tom Copeland Position: Managing Director
RISK IDENTIFIED: PROFIT FOR FY BELOW 90% OF BUDGET
STRATEGIES/ACTIVITIES TO MINIMISE THE RISK BY WHEN BY
WHOM
Produce quarterly variation reports to identify income/ expenditure and profit shortfalls over 10%. Q2 PR
Implement sales training/coaching. Q2 PR
Implement incentives program. Q2 PR
Reduce overtime. Q2 PR
Contingency implementation plan for Task B
Contingency plan template
Contingency Plan Company name: Big Red Bicycle Pty Ltd Person developing the plan:
Name Position
Risk identified:
Strategies/activities to minimise the risk By when By whom
Appendix 5 PREPARATION
BSB51107 Diploma of Management
BSBFIM501A Manage budgets and financial plans
1. Create a spreadsheet in Excel and name it yourfirstname.xls
2. Starting in cell B1, create 4 columns called First, Second, Total and Calculate
3. In cell B2, enter the number 1 and in the cells below it, the numbers 2, 3, 4 and 5.
4. In cell C2, enter the number 6 and in the cells below it, the numbers 7, 8, 9 and 10.
5. In cell D2, enter the addition of cell B2 and cell C2.
6. In cell E2, enter the multiplication of cell C2 and cell D2.
7. Copy the formulae from cell D2 to the cells D3 to D6.
8. Copy the formulae from cell E2 to the cells E3 to E6.
9. In cell B7, enter Auto Sum
10. Copy that formula to the cells C7, D7 and E7.
11. Insert a new row at the top.
12. Merge and Centre B1, C1, D1 and E1.
13. Type in your name.
14. Include Print Gridlines. 15. Print the spreadsheet .