BSBFIM601- Manage Finance PROJECT - D Learner assessment guide and evidence This assessment requires you to complete a budgeted profit and loss statement, calculate variances and answer the questions. You are required to do the following. Read and interpret the information provided at the start of each task. Complete Tasks 1 and 2. Answer all the questions. Perform all calculations in Task 1 and 2. Task 1: Question and answer You have owned an accommodation business for a few years, but have only recently begun to prepare operating and financial budgets for the business. You did this without any assistance. Your first budgeted profit and loss statement was prepared using the following information and assumptions. Maximum capacity: Number of days per year: Expected occupancy rate: Tariff per room per night: Servicing costs per roomight: Fixed costs: Admin/reception salaries: Grounds & maintenance: General manager: Utilities (electricity, gas, rates) Depreciation of equipment Q1: 30 rooms 365 80% $120 $20 labour $5 supplies (bathroom, etc.) 3 people @ $60,000 salary per annum 2 people @ $50,000 per annum 1 person @ $85,000 per annum $90,000 per annum $140,000 per annum Complete the budgeted profit and loss statement using the information and assumptions provided in the information provided. Complete the shaded fields. Budgeted nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation Net profit before tax Less estimated tax expense (30%) Net profit after tax Q2: How might reviewing previous financial data assist in budget preparation? Q3: Should you involve others in the process of preparing budgets? Who and why? Q4: List four examples of the type of information you should share with managers and supervisors to ensure they are clear about their responsibilities, reporting requirements and financial delegations. Task 2: Question and answer Q1: Complete the performance report.Complete the shaded fields. Review the existing data in the performance report. Calculate the variances. Calculate the variance percentages. Decide whether the variances are favourable or unfavourable. Budget $ Nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance General manager Utilities Depreciation Total fixed costs Net profit before tax Less estimated tax expense (30%) Net profit after tax Actual $ 8,760 1,051,200 7,665 919,800 175,200 43,800 219,000 832,200 160,965 41,391 202,356 717,444 180,000 100,000 85,000 90,000 140,000 595,000 237,200 71,160 189,000 105,000 87,500 86,000 140,000 607,500 109,944 32,983 166,040 76,961 Variance $ % Variance Q2: Comment on the results explaining the likely causes of the variances. Q3: What recommendations would you make to management given these results? Favourable (F) or Unfavourable (U) PROJECT-E Learner assessment guide and evidence This assessment requires you to prepare a flexible budget and answer the questions provided. You are required to do the following. Read and interpret the information provided at the start of the task. Answer all the questions. Perform all calculations in Task 1. Task 1: Question and answer You have owned an accommodation business for a few years, but have only recently begun to prepare operating and financial budgets for the business last year. You did this without any assistance. It's brought to your attention that many of the variances previously reported are invalid because they were based on different levels of activity. The actual number of nights booked was 7,665. Prepare a flexible budget based on this information. Complete the shaded fields. Q1: Review the financial data. Prepare a flexible budget, i.e., recalculate the budget based on the actual level of activity using the table provided. Calculate and record the variances and variance percentages. Decide whether the variances are favourable or unfavourable. Original budget forecast Budget $ Variance % Flexible budget Actual $ Nights booked 8,760 (12.5) 7,665 Tariff revenues 1,051,200 (12.5) 919,800 Room servicing labour Room servicing supplies Total variable costs 175,200 (8.1) 160,965 43,800 (5.5) 41,391 219,000 (7.6) 202,356 Gross profit 832,200 (13.8) 717,444 Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities 180,000 5 189,000 100,000 5 105,000 85,000 2.9 87,500 90,000 4.4 86,000 Depreciation 140,000 Less variable costs Less fixed costs Total fixed costs Net profit before tax Less estimated tax expense (30%) 140,000 595,000 2.1 607,500 237,200 (53.6) 109,944 71,160 (53.6) 32,983 Flexible budget $ Variance $ Variance % F or U Net profit after tax Q2: 166,040 (53.6) 76,961 Explain which of the expenses you 'flexed' according to the actual level of activity and why. Q3: Which expenses didn't you 'flex' and why? Q4: Write a brief summary to management based on the results and information you've recorded in the flexible budget. PROJECT F Learner assessment guide and evidence This assessment requires you to calculate employee payroll costs and calculate GST liability. You are required to do the following. Read and interpret the information provided at the start of each Task. Complete Tasks 1 and 2. Answer all the questions. Perform all calculations in Tasks 1 and 2. Task 1: Question and answer You have owned an accommodation business for a few years, but have only recently begun to prepare operating and financial budgets for the business. You did this without any assistance. You're caught by surprise when you have to pay extra and significant on-costs to the Federal and State Governments. These were paid by the senior manager and explained to you later. They included: Q1: Superannuation contribution: 9.5% for all full-time staff Payroll tax: 2% Safe Work premiums: 1% Calculate the cost per annum for each of the on-costs for each type of employee. Round your figures up to the nearest whole dollar. Complete the shaded fields. Actual payroll cost $ Room servicing labour Admin/reception salaries Grounds & maintenance salaries General manager salary 160,965 189,000 105,000 87,500 Super 9.5% Payroll tax 2% Safe Work 1% Total cost of labour $ Q2: Assume that the full-time staffs are paid monthly. Using the PAYG tax withheld calculator on the ATO website, complete the shaded fields. Admin/ reception salaries Grounds & maintenance General manager Monthly total $ Number of staff Gross pay per person per annum $ 3 60,000 2 50,000 1 85,000 Gross pay per person per month $ PAYG deductio n $ Takehome pay pp/pm $ Total monthly net pay to staff $ Total monthly PAYG payable to ATO $ 365,000 Task 2: Question and answer When preparing your original budget and profit and loss statement you failed to take into account ATO requirements for the collection and payment of GST and its impact on the business's finances. You collected GST by adding the standard rate of 10% to all customer accounts during the accounting period. You also paid GST on all expenses except for salaries, wages and depreciation. Using the actual revenue and expense figures for that financial year, you now need to calculate your GST liability so you can lodge a business activity statement with the ATO. If you can't remember the formulas for calculating GST, they are located in Section 1 of your learning material. Financial result for year ending: 31.06.20XX Nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies 7,665 919,800 Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance General manager Utilities Depreciation Total fixed costs Net profit before tax Less estimated tax expense (30%) Net profit after tax Actual $ 160,965 41,391 202,356 717,444 189,000 105,000 87,500 86,000 140,000 607,500 109,944 32,983 76,961 Q1: Using the actual figures, calculate the GST that was charged to customers for the entire year and is therefore payable to the ATO. Show how you calculated the figures. Q2: Using the actual figures, calculate the GST that had to be paid to suppliers on the business Expenses and is therefore refundable from the ATO. Show how you calculated the figures. Q3: Using the actual figures, calculate the net GST payable or receivable as at the end of the year. . Show how you calculated the figures Q4: Ultimately, what impact does GST have on a business's profitability and cash flow? Explain your Answer. Project- G Learner assessment guide and evidence This assessment requires you to calculate and analyse operating and financial budgets. You are required to do the following. Read and interpret the information at the start of the task. Complete Tasks 1, 2, 3 and 4. Answer all the questions. Task 1: Question and answer You have owned an accommodation business for a few years, but only began to prepare operating and financial budgets for the business last year. Your actual figures for the previous year show that the business is not achieving the profits you forecasted and wish to achieve. Your actual occupancy rate for the previous year was 70%. It's time to start preparing budgets for the next financial year. You believe that, with an annual advertising and marketing campaign costing $60,000 (+GST), you can increase the overall occupancy rate to 75%. Q1: List four internal factors you must consider when estimating next year's occupancy rate. Q2: List four external factors you must consider when estimating next year's occupancy rate. Task 2: Budget Using the information provided in Tasks 1 and below, apply an incremental budgeting approach to prepare the annual profit and loss budget. Complete Option 1 in the table by basing your calculations on an increased room rate of $125 and anticipated wage rises of 2.5%. Ignore GST. Show your calculations and formulas. Complete the shaded fields. Using the information provided in Tasks 1 and 2 and the results of calculations in Q.1, complete Option 2 in the annual profit and loss budget. Base your calculations on reducing current room rate by 10% and anticipated wage rises of 2.5%. Ignore GST. Complete the shaded fields. Round all figures to the nearest whole number. You've become aware of a new competitor opening in your local area. You consider decreasing rates by 10%. However, wages are currently under review and are likely to rise by 2.5% for all staff. If this occurs, you think you will have to increase the standard room rate to $125 if the business is to remain profitable. To determine the impact of these changes on your business, you need to compare the two scenarios. Base your calculations on the following business information. Maximum capacity: Number of days per year: Expected occupancy rate: Current tariff per room per night: Servicing costs per roomight: 30 rooms 365 75% $120 $20 labour $5 supplies (bathroom, etc.) Fixed costs: Admin/reception salaries: 3 people @ $60,000 salary per annum Grounds & maintenance salaries:2 people @ $50,000 per annum General manager salary: 1 person @ $85,000 per annum Utilities (electricity, gas, rates) $90,000 per annum Depreciation of PPE $140,000 per annum When completing your calculations, don't forget to include labour on-costs. Superannuation contribution: 9.5% Payroll tax: 2% Safe Work premiums: 1% Option 1 - increase room rate + wage rise Rate / formula Budgeted nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Total variable costs Contribution margin Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation Advertising Total fixed costs Net profit before tax Less estimated tax expense (30%) Net profit after tax Total $ 8,213 Option 2 - reduce room rate by 10% 8,213 Task 2.1 Question and answer Q1: Evaluate the impact of the different room rates and wage rises on the business. Explain your response, referring to the financial data, information, calculations or budget forecasts you have based your explanation on when necessary. Q2: What specific information should you seek about your competitors prior to making any decisions? Q3: What recommendations would you make to increase projected profit? Briefly list the benefits and challenges of your recommendation. While showing your new budget to the business manager, you both realise that preparing an annual budget is inadequate for managerial planning and control purposes. The budget cycle should be adjusted to show quarterly and in some cases monthly progress against the budget. Q4: Why do you think this change is necessary? Task 3 Prepare a profit and loss budget on a quarterly basis for the summer and winter quarters. (Hint: the fixed costs will be one quarter of the annual total!). Base your tariff revenue calculations on a room rate of $125 per night. Base your wage and salary calculations on the figures calculated in Option 1 of the profit and loss statement in Task 2. Ignore GST. Complete the shaded fields. Round your figures to the nearest whole number. You soon realise that occupancy rates are highly seasonal, with demand peaking during school holidays and long weekends. The annual occupancy rate recorded in your reports is actually just the average of the four quarterly occupancy rates. An investigation of past records reveals the following pattern. Max capacity per annum (nights booked) Nights booked at 75% occupancy rate overall Max capacity per quarter Spring Summer Autumn Winter (Sept to Nov) (Dec to Feb) (March to May) (June to August) Occ. % 80 100 75 45 10,950 8,213 2,738 No. nights 2,190 2,738 2,053 1,232 8,213 Spring quarter $ Budgeted nights booked Tariff revenues 2,190 Summer quarter $ 2,738 Autumn quarter $ 2,053 Winter quarter $ 1,232 Annual total $ 8,213 Less variable costs Room servicing labour Room servicing supplies Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation Advertising Total fixed costs Net profit/(loss) before tax Note: The annual totals for each entry should reflect the results for Option 1 in Task 2. Totals may vary by one or two dollars due to rounding processes when calculating quarterly figures. Task 3.1: Question and answer Q1: Do you believe the even distribution of all fixed costs across the four quarters is a reasonable or accurate assumption? Explain the reasoning for your response. Q2: In light of the huge differences in profits between the busy summer months and the quiet winter months, outline your recommendations for improving the business's profitability. Task 4 Prepare a cash flow budget for the winter quarter based on the following assumptions. All customers are charged 10% GST. 85% of customers pay their bills (including GST) within the same quarter of their stay at your establishment. The other 15% of customers pay in the following quarter. All expenses (other than depreciation) are paid in the quarter in which they are incurred. Figures provided for autumn quarter cash outflows are GST inclusive. All winter cash outflow figures in the above budget are GST free. GST must be calculated and added to all GST-attracting outflow figures in the cash flow statement. Ignore PAYG deductions for this activity. All payroll on-costs are included in the figures provided in the budget above. The cash balance at the beginning of the winter quarter is $5,000. Round your figures up to the nearest whole dollar. Complete the shaded fields. It's essential to prepare a cash budget to maintain a business's solvency (or cash position). Although this could be done on a monthly basis, use the winter quarter figures to complete this activity. Winter quarter $ Budgeted nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation of PPE Advertising Total fixed costs Net profit/(loss) before tax 1,232 154,000 28,410 $6,160 34,570 119,430 51,891 28,828 24,504 22,500 35,000 15,000 177,723 (57,480) Autumn quarter Winter quarter Est cash receipts winter quarter Receipts from previous quarter's customers Receipts from current quarter's customers $ 256,625 $ Total estimated cash inflows Estimated cash outflows Room servicing labour Room servicing supplies Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Advertising Payment of net GST from autumn quarter *(see below) Total estimated cash outflows Net surplus / deficit Cash balance at start of winter quarter Cash balance at end of winter quarter GST Liability for autumn quarter GST collected and payable $256,625 10% = Less GST paid: Supplies $10,265 10% = Utilities $22,500 10% = Advertising $15,000 10% = Net GST for autumn - payable early in winter quarter $ 25,663 1,027 2,250 1,500 $ 4,777 20,886 Task 4.1: Question and answer Refer to the cash budget in Task 4. Your business arranges a short-term loan at the beginning of the winter quarter of $20,000 for three months (repayable in three months' time with interest charged at 1% per month). Q1: What would the total cash inflow be during the winter quarter? Q2: Calculate the cash outflow for the quarter. Q3: You're considering opening a new division within the establishment to improve your service to customers. Write a list of the factors you need to consider when evaluating this proposal. Task 4.2: Question and answer You receive the following email from a dissatisfied customer. 'I rocked up late to your reception desk - tired and worn out from a long drive with three cranky kids in the car! Your receptionist offered me a $50 discount if I paid cash. Well of course I couldn't pass up such a good opportunity, so I paid my $50. But the next day when I checked out and asked for a receipt, she refused. I'm not impressed! That's no way to run a business!' Q1: How would you respond? Q2: List six steps you could take to minimise the risk of misappropriation of funds in your workplace. Q3: Part of your role requires you to show due diligence and financial probity. What do these terms mean