You are the manager of a small bed and breakfast owned by Marino Enterprises. Comfy Inn is located in country Victoria and was purchased by the company two years ago when the long term owners decided to sell. The B&B was sentimental to John Marino and Betsy Smith as they used to stay there in their younger days. When it came onto the market they snapped it up.

Some background on the B&B they are a small luxury homestay property that offers seclusion, privacy and romance for an adults only stay. There are three cabins onsite; each fully contained. They provide a full breakfast in the main house and a full bar that is open for drinks and canaps from 4pm 6pm on Friday, Saturday and Sunday afternoons. The bar is open at other times for snacks, coffee, tea, smoothies, soft drinks and alcohol purchases.

Marino Enterprises looks after the property grounds and the managers wage. Everything else is the responsibility of the manager who resides onsite in the main house. Your partner is employed as the short order cook and you pay a casual cleaner. As part of the onsite managers role, you and your partner complete the general housekeeping duties when it is quiet.

It is budget preparation time and Betsy has asked you to meet with her to discuss the details.

Betsy has provided you with last years actual revenue received, broken down into accommodation, food and beverages.

REVENUE BUDGET ACTUAL for 2015-2016 Comfy Inn B&B
	LAST YEAR
	Accommodation	Food	Beverages	TOTAL
July	3,000	1,600	1,560	6,160
August	2,800	1,800	1,600	6,200
September	2,800	1,800	1,900	6,500
October	3,600	2,400	1,800	7,800
November	3,800	3,000	1,960	8,760
December	6,000	3,800	1,700	11,500
January	8,800	3,800	1,600	14,200
February	8,800	4,000	1,600	14,400
March	3,800	3,400	1,400	8,600
April	3,600	2,600	1,200	7,400
May	3,400	2,400	1,400	7,200
June	3,200	1,800	1,500	6,500
TOTAL	$53,600	$32,400	$19,220	$105,220

Betsy has come back to you with some changes to be made to the draft budget. These changes will have come via email or feedback on your hard copy draft.

Betsy also thinks that you have over calculated the cost of stock and the wages at 25% is too high. She has asked you to consider options for reducing the cost of both without effecting customer service levels, the quality of product and of course the income.

She has also asked you to have the final draft of the budget back to her within the week.

1. Provide at least three recommendations for changes to the budget that will satisfy Betsys requests in a memo. It is your responsibility to meet the budget so you can choose to make recommendations to increase income, decrease expenditure wherever you see fit or even negotiate not to make any changes to the expenditure.

Make the changes to your budget in the accounting software. Produce a final budget report and submit it to your assessor along with a memo outlining the changes you have (or have not) made with an explanation justifying your decisions. In your justifications include the advantages and disadvantages of accepting your changes. Submit your memo and report to your assessor by the due date.