You have received the following email from the Chief Executive Officer of Clark Casc Logistics plc, where you are employed as manager of a loading bay, inviting you to the first in a series of budget-setting meetings and asking you to submit a brief report in advance.

Dear Laser,

For the last financial year Clark Casc Logistics plc made a loss of 3.2 million and the Board is therefore reaching out to all managers to find ways of reducing the costs for which they are responsible, ahead of next months meeting on compulsory redundancies, early retirements and redeployments to our toxic waste sorting division.

We will be holding a first round of budget-setting meetings on Thursday next week. As the manager of the Craiglockhart loading bay at Clark Cascs Craiglockhart Loading Bay, the expenditure for which you were responsible for the last financial year was as follows.

Next Year

The purpose of next weeks meeting is not to rake over the ongoing overspend for this year but we need to plan for next year. We are going to need you to agree a total budget of 882,000 for next year. Mo will update the figure for apportionment of Central Administrative Costs sometime after the meeting but Im guessing itll be based on this years actuals, so I suggest you use that. Its the rest of the costs we need to discuss with you.

You will need to take account of the 3% across-the-board wage increase Piotr agreed with the unions last week. That applies evenly across all types of staff in the loading bay.

Please provide a report in advance of the meeting detailing how you intend to find the necessary savings.

Please include the following sections in your report. We do not require an executive summary:

1. Introduction

2. Approach to drawing up the loading bay budget

3. Relevant calculations to show that your budget is achievable

4. Your proposed budget with full figures

5. A conclusion on the achievability of the 882,000 overall loading bay budget

6. Recommendations on next steps

Please make sure you provide a list of references to any published external material you refer to in your report.

Make sure your report is at least 2,250 words to prove youve done some work but Im not reading it if its more than 2,750 words apart from the references. I will not waste time reading appendices. If you have something to say, say it in your report.

If you have any specific suggestions on improving the budget process, please include these in section 2 the approach to budgeting - and in your conclusion and recommendations.

I hope you are enjoying your Business Economics and Finance course at Edinburgh Napier University. You never know when youre going to need to include something like that in your cv.

I look forward to receiving your report and seeing you at next Thursdays meeting.

Best Wishes,

Mark

Further information

In addition to the information in the Chief Executives email, you possess the following information.

You are now preparing for an initial budget meeting with the finance director. For next year, you have been asked to seek a reduction in costs overall compared with last year on top of reversing this years increase.

The finance director has already agreed a 3% increase in staff wages for next year but you have identified some staff positions which may be redundant. You may be able to cut staff numbers by 10% immediately, with the jobs to be cut carrying average wages for your department. However, Clark Casc will have to pay at leaset the statutory redundancy payments required by law in the United Kingdom.

At least 10% of your equipment is also redundant. It could be sold or offered to another department.

You have the authority to switch energy suppliers. You have investigated this and found that an alternative supplier would charge you 5% less than your current rate for the rest of this year and for the first 6 months of next year but will increase their prices by 3% for the following 12 months and by a further 3% each year thereafter.

You have also discovered that the refrigeration system is in need of repair. A simple repair, which you have already ordered for this year, will cut refrigeration costs by 40%. Improved maintenance will cost just 1,000 extra per year.

The Craiglockhart Loading Bay which you manage adjoins other parts of the depot. You have learned from the manager of Clark Cascs nearby vehicle maintenance workshop that the workshop has a lot of excess capacity and could operate in a smaller physical space. Your observation is that there is a lot of underused space at the Craiglockhart depot as well.

General inflation for the last 12 months has been 0.8%.

Required:

Write your report, addressed to the Managing Director of Clark Casc and containing the following sections, as directed in the Managing Directors email. Submit your report in the Turnitin dropbox.

1. Introduction

2. Budgeting Approach

3. Relevant Calculations

4. Proposed Loading Bay Budget

5. Conclusion

6. Recommendations

7. References

22 Last Year Budget Actual 000 000 Wages and Employers' National Insurance and Pension 528 531 Contributions Equipment Maintenance 76 81 Equipment Depreciation 74 75 Buildings Maintenance 36 32 Buildings Depreciation 56 56 Heating and Lighting 30 30 Goods Refrigeration 14 15 Apportionment of Central Administrative Costs 74 75 Insurance Costs Apportioned Based on Past Claims 20 Other Costs 10 11 Total Expenditure, Tax and Dividends 918 928 Your expenditure for the first six months of the present financial year is as follows, with a comparison with the budget which, I would remind you, you agreed to this time last year. This Year Budget Actual Year to Year to Date Date 000 000 Wages and Employers' National Insurance and Pension 268 271 Contributions Equipment Maintenance 38 42 Equipment Depreciation 37 37 Buildings Maintenance 18 17 Buildings Depreciation 28 28 Heating and Lighting 16 15 Goods Refrigeration 8 8 Apportionment of Central Administrative Costs 40 42 Insurance Costs - Apportioned Based on Past Claims 10 12 Other Costs 6 6 Total Expenditure, Tax and Dividends 469 478 00000000 0001 000 N 22 Last Year Budget Actual 000 000 Wages and Employers' National Insurance and Pension 528 531 Contributions Equipment Maintenance 76 81 Equipment Depreciation 74 75 Buildings Maintenance 36 32 Buildings Depreciation 56 56 Heating and Lighting 30 30 Goods Refrigeration 14 15 Apportionment of Central Administrative Costs 74 75 Insurance Costs Apportioned Based on Past Claims 20 Other Costs 10 11 Total Expenditure, Tax and Dividends 918 928 Your expenditure for the first six months of the present financial year is as follows, with a comparison with the budget which, I would remind you, you agreed to this time last year. This Year Budget Actual Year to Year to Date Date 000 000 Wages and Employers' National Insurance and Pension 268 271 Contributions Equipment Maintenance 38 42 Equipment Depreciation 37 37 Buildings Maintenance 18 17 Buildings Depreciation 28 28 Heating and Lighting 16 15 Goods Refrigeration 8 8 Apportionment of Central Administrative Costs 40 42 Insurance Costs - Apportioned Based on Past Claims 10 12 Other Costs 6 6 Total Expenditure, Tax and Dividends 469 478 00000000 0001 000 N