In an Excel spreadsheet templates provided you are required to:

Prepare an income statement

Prepare a performance report

Prepare a report of performance of the actual budget.

Assessment criteria: To achieve a satisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to an acceptable industry standard:

Prepare a budgeted income statement

Prepare a report showing Variances in dollars and percentage

Preparea report discussing the actual performance of the budget

Assessment 3 Task 1

The Jersey Dairy Company is a producer of top quality dairy products. The manager has provided the following information in relation to two of its products, tubs of yoghurt and cottage cheese, for the year 2015- 2016. The budget selling prices for the products were $8 per tub of yoghurt and $5.50 per tub of cottage cheese.

Expected sales were 90,000 tubs of yoghurt and 47,800 tubs of cottage cheese.

Budgeted cost of goods sold in each case was 40% of the selling price. Actual sales were: Yoghurt 53,000 tubs at $8 and 34,500 tubs at $7.20

Cottage cheese 49,200 cartons at $5.50

Cost of goods sold were:

Yoghurt $235,340

Cottage Cheese $113652

Budget and actual period cost were:

Budget

Actual

$

$

Sales salaries

144,000

141,204

Advertising

72,000

60,516

Depreciation

28,000

28,000

Office Expenses

180,000

185,000

You are required:

a. Prepare and income statement for the year 2015 - 2016

b. Prepare a performance report for the income statement for the year, showing gross profit, net profit and all variances from the budget in dollars and percentages.

c. Write a brief report on the on the performance of the actual budget

Task 2

Peter Jacobs, the owner of Jersey Dairy Company, needs to increase his profits in the 2016 by 30% to maintain viability.

Following your discussions with Peter you have agreed to the following.

Peter believes that the expenses for the year would increase as follows, Insurance 7.5% and Wages by 4.3%.

Advertising expense to increase by at least 8%.

Fuel and oil would increase by 5%

Income tax expense is expected to be $50,000 (the same as 2015)

The budget would not include Discounts Allowed, Sale of any Non-Current Assets, Discounts Received or Bad Debts.It is expected that all other Revenues and Expenses would remain the same. Service Fees will increase

Peter has estimated the seasonalservices fee breakdown in the next four quarters to be as follows:

Seasonal Variation

Quarter 1

Quarter 2

Quarter 3

Quarter 4

100% of annual Service Fees

20%

15%

35%

30%

In an Excel spreadsheet templates provided you are required to: Prepare an income statement Prepare a performance report Prepare a report of performance of the actual budget. Assessment criteria: To achieve a satisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to an acceptable industry standard: Prepare a budgeted income statement Prepare a report showing Variances in dollars and percentage Prepare a report discussing the actual performance of the budget Assessment 3 Task 1 The Jersey Dairy Company is a producer of top quality dairy products. The manager has provided the following information in relation to two of its products, tubs of yoghurt and cottage cheese, for the year 2015- 2016. The budget selling prices for the products were $8 per tub of yoghurt and $5.50 per tub of cottage cheese. Expected sales were 90,000 tubs of yoghurt and 47,800 tubs of cottage cheese. Budgeted cost of goods sold in each case was 40% of the selling price. Actual sales were: Yoghurt 53,000 tubs at $8 and 34,500 tubs at $7.20 Cottage cheese 49,200 cartons at $5.50 Cost of goods sold were: Yoghurt $235,340 Cottage Cheese $113652 Budget and actual period cost were: Sales salaries Advertising Depreciation Office Expenses Budget $ 144,000 72,000 28,000 180,000 Actual $ 141,204 60,516 28,000 185,000 You are required: a. Prepare and income statement for the year 2015 - 2016 b. Prepare a performance report for the income statement for the year, showing gross profit, net profit and all variances from the budget in dollars and percentages. c. Write a brief report on the on the performance of the actual budget Task 2 Peter Jacobs, the owner of Jersey Dairy Company, needs to increase his profits in the 2016 by 30% to maintain viability. Following your discussions with Peter you have agreed to the following. Peter believes that the expenses for the year would increase as follows, Insurance 7.5% and Wages by 4.3%. Advertising expense to increase by at least 8%. Fuel and oil would increase by 5% Income tax expense is expected to be $50,000 (the same as 2015) The budget would not include Discounts Allowed, Sale of any Non-Current Assets, Discounts Received or Bad Debts. It is expected that all other Revenues and Expenses would remain the same. Service Fees will increase Peter has estimated the seasonal services fee breakdown in the next four quarters to be as follows: Seasonal Variation 100% of annual Service Fees Quarter 1 20% Quarter 2 15% Quarter 3 35% Quarter 4 30% a. Using the Budget provided determine the year's budget objective and provide service fees and the service fees milestones for each quarter. Budget of Jersey Dairy Company for period January-December 2015 Actuals 2015 Income Service Fees Other Revenue Interest Revenue Total Revenue Expenses Advertising Insurance Fuel & Oil Electricity Equipment Repairs Wages Interest on Mortgage Interest on Overdraf Total Expenses Profit before Tax Income Tax Profit after tax % Change Budgeted 2016 750,000 2,800 752,800 10,350 18,250 10,000 2,000 60,493 205,000 9,250 11,250 326,593 426,207 50,000 376,207 8.00% 7.50% 5.00% 4.30% 30.00% Task 3 In a word document answer the following the following budgeting theory questions. A. Outline the key principles of statistical analysis and measures of variance B. Describe the key features of organisational procedures and policy for financial administration APPENDIX EXTRACT - POLICIES & PROCEDURES Procedure for Financial Administration and Budgeting Policy: Jersey Dairy Company has implemented this policy to ensure that financial administration is completed in accordance with legal, ethical and accounting requirements. Processing of financial transactions: All Employees must ensure financial transactions are recorded accurately and timely. Confidentiality Employees should perform their duties with honesty and integrity Financial reporting: Financial statements should be prepared in accordance with the Australian Accounting Standards AASB101. Accrual basis: All transactions should be prepared on an accruals basis and are based on historical costs. GST: Jersey Dairy Company. Is registered for GST and therefore must account for GST in all applicable transactions and on Financial Statements. Budgets The budget process will include consultation and communication with managers from all departments. Forecasting techniques will include internal/controllable factors and external /uncontrollable factors. Budgets will be monitored weekly to identify all Key Performance Indicators. Budget control will compare accurate results with budgeted figures. Errors and omissions All errors and omissions detected in financial reports must be referred to the company accountant or immediate supervisor before any corrections are attempted. FNSACC402 The Jersey Dairy Company Budget units Sales: Yoghurt Sales: Cottage cheese Total sales Less Cost of goods sold Yoghurt Cottage Cheese Total cost of goods sold Gross profit Less Expenses Sales salaries Advertising Depreciation Office expenses Total expenses Net profit Income statement for 2015-2016 Actual Budget % units $ Actual $ Variance $ F/U %