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 - sale income

?increases in expenses such as wage expenses - 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.

Appendix 2 - Budgeting and finance policy

Budget preparations - policies and procedures you should follow

?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 CFO.

?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 as 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.

Financial delegations

?Each manager is responsible for achieving the revenue budgets agreed to by 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 report

?period of the budget.

Appendix 3

Income Profit and Losses statement Expenses 2 - FY - budget Annual Actual $ Varlance % Varlance - 2 F/UF - 1 Notes number REVENUE Commissions - E 77,500 72,500 5,000 6% Direct wages fixed - E 200,000 200,000 0% Sales - Income 3,100,000 2,900,000 200,000 6% UF Cost of Goods Sold - E 400,000 380,000 20,000 5% Gross Profit 2,422,500 2,247,500 175,000 7% EXPENSES General & Administrative Expenses Travel 20,000 22,000 2,000 10% JF Legal Fees 5,000 4,500 500 0% F Bank Charges 700 100 17% UF Office Supplies 5,000 4,000 1,000 0% F Postage & Printing 400 500 100 25% UF Dues & Subscriptions 500 600 100 20% UF Telephone 10,000 11,200 1,200 12% UF Repairs & 50,000 45,000 5,000 10% F Maintenance Payroll Tax 25,000 25,000 0% Marketing Expenses Advertising 200,000 208,000 8,000 4% UF Employment Expense Superannuaten 45,000 45,000 0% Wages & Salaries 500,000 500,000 0% Staff Amenities 20,000 23,000 3,000 15% UF Occupancy Costs Electricity 40,000 38,000 2,000 5% F Insurance 100,000 100,000 0% Rates 100,000 100,000 0% Rent 200,000 200,000 0% Water 30,000 35,000 5,000 17% UF Waste 60,000 60,000 10,000 -20% Removal UF TOTAL EXPENSES 1,401,500 1,422,500 21,000 1%% UF NET PROFIT (BEFORE INTEREST & TAX) ,021,000 $25,000 196,000 19% UF Income Tax Expense (25% Net) 255,250 206,250 49,000 19% F NET PROFIT AFTER TAX 65,750 18,750 147,000 19% UFContingency plan template Contingency Plan Company name: Big Red Bicycle Pty Ltd Person developing the plan: Information, Excel analysis at least 10 risks