Manage Budget Forecast
Manage Budget Forecast must submit assessments by due dates; otherwise, they will incur a fine of $50.00.per Unit (if submitted within one week after the due date) followed by $100.00 per Unit (if submitted within two weeks after the due date) and $150.00 per Unit (if submitted within one month after the due date). If you don’t submit assessments even by one month, or do not pay fines, HIBT may report to DIBP as against non-completion of assessments and non-payment of fees and fines, and it may affect your student visa.
Plagiarism is not accepted in Australian education system and at HIBT. You should not practice any plagiarism in your assessments or any other works. If you are found to practice plagiarism, or your assessment has been found to be plagiarised, you will be fined $250 (for first time) followed by $500 (for second time) and $1000 (for third time). If you are still found to be plagiarised after the third time, HIBT will report to DIBP as against plagiarism and it may affect your student visa.
ASSESSMENT SUMMARY / COVER SHEET
| This form is to be completed by the assessor and used as a final record of student competency. All student submissions including any associated checklists (outlined below) are to be attached to this cover sheet before placing on the students file. Student results are not to be entered onto the Student Database unless all relevant paperwork is completed and attached to this form. |
| Unit Code: | FNSACC503 |
| Unit Title: | Manage budget and forecast |
| Please attach the following documentation to this form | Result S = Satisfactory NS = Not Satisfactory NA = Not Assessed | |
| Assessment 1 | qWritten Assessment | S | NS | NA |
| Assessment 2 | qCase Study | S | NS | NA |
| Assessment 3 | qProject | S | NS | NA |
| Assessment 4 | qOnline Assessment | S | NS | NA |
Manage Budget Forecast
| Final Assessment Result for this unit | C / NYC |
ASSESSMENT 1 – WRITTEN ASSESSMENT
1.1 Define budgets. Define and differentiate cash, revenue and expenditure items by providing an example of each category and which budget it is relevant to when preparing.(PC 1.1)
1.2 Define the following:
– Fixed and flexible budget
– Fixed cost and variable cost
– Breakeven point
– Types of budgets
1.3
How is the budget process affected by revenue forecasting and what are the limitations in the revenue forecasting technique and how can the same be countered? (PC 3.4)
1.4 Explain the role and function of budgets in helping an organisation reach its objectives.(PC 1.2)
1.5 List five controls that could be used to monitor an organisation’s budget, also briefly explain the importance of variance analysis.(PC 3.3)
1.6 List the steps associated with preparing and documenting the budget process and forecasting estimates. (PC 4.2)
1.7 Explain why stakeholders should be included in the discussion and negotiations of the budget. List stakeholders that have a stake in the outcome of the budget. (PC 1.3)
1.8 What are budget performance indicators? In addition, explain the role of performance indicators in managing budgets and how are expenditure milestones set up? (PC 1.4)
1.9 What are the reasons why Cash Flow Risk may occur? How can Cash Flow Risk be reduced? (PC 2.4)
1.10 In your meeting with your CEO, he has asked you for your input in establishing budget timelines. How could you use the concept of budget calendar in describing reporting timelines and respond back to the CEO? (PC 3.2)
1.11 Auditing of the budget process in any organisation is of great importance which needs to be conducted every two to three years. What does the budget audit examine and detect and the necessary corrective action that needs to be considered.(PC 4.2)
ASSESSMENT 2 –CASE STUDY
Answer the following questions:
Q1 – Read the case study and prepare budget using the information:
Revenue,
Operating expenses,
Integrated income statement,
Cash budget, for the quarter ending 30 June 2015,
Ensure that your budget is presented in table, graph or other forms that enables understanding and clarity.
YOUare the “chairperson” of the budget committee of Dominic’s Inc. Management want to have a quarterly budget to ensure sales operating expenses are well planned implemented and monitored and controlled to achieve improved operating outcome than was done last quarter. As such the budget lines for sales cogs and operating expense have been provided to you as a guide for the next quarter budgets.
- A) Dominic’s Inc Co. sells three products, A, B and C. Sales results for March 2015 was:
| Product | Units Sold | Sales price Per unit | Sales Value $ |
| A | 6,000 | 6 | 36,000 |
| B | 12,000 | 10 | 120,000 |
| C | 15,000 | 4 | 60,000 |
| È Additional information |
| Sales quantities (units) are expected to be the same in April and May and will increase by 10% in June. Sales prices are forecast to increase to $8 (Product A), $12 (Product B) and $5 (Product C) as from June. |
B)Dominic’s Inc also had the following operating expenses for the three months ended 31 March 2015.
| ITEM | Amount ($) |
| Accounting Fees | 800 |
| Advertising | 2,400 |
| Bank charges | 620 |
| Depreciation | 3,500 |
| Electricity | 2,320 |
| Insurances | 6,818 |
| Interest Paid | 6,210 |
| Rent | 24,000 |
| Stationery | 2,060 |
| Sundries | 1,264 |
| Superannuation (office staff) | 5,462 |
| Telephone | 4,262 |
| Wages (office staff) | 60,680 |
| Total operating expenses | $120,396 |
| ÈAdditional information: |
| Advertising costs are expected to increase by $1,000 next three months. |
| Depreciation charges are the same every quarter. |
| Insurances will rise by $500 next three months. |
| Interest paid is the same each quarter. |
| Annual Rent will increase by 3% for the quarter |
| Superannuation is 9% of wages |
| Wages paid are expected to increase by 4% each quarter. |
| All other operating expenses are expected to increase by 4% each quarter. |
) In the last quarter the business became financially strapped. It lacked enough cash to meet its recurrent financial obligation. This had to be avoided to ensure continuity of the business and competitiveness in the market place.
Dominic’s Inc. also provided you with actual sales for January and February and forecasted sales for March, April, May and June as follows:
| JAN | FEB | |||||
| Actual: | $192,000 | $218,000 | ||||
| Forecast: |
Based on company experience, it is estimated that 35 percent of a month’s sales are collected in the month of sale, 48, percent in the month following the sale, and 16 percent in the second month following the sale
- q Templates:
Sales Budget
| Product | Units Sold | Sales price Per unit | Sales Value $ |
| April | |||
| Product A | |||
| Product B | |||
| Product C | |||
| May | |||
| Product A | |||
| Product B | |||
| Product C | |||
| June | |||
| Product A | |||
| Product B | |||
| Product C | |||
| TOTAL |
Operating Expenses Budget
/for the three months ending 30 June 2015/
| Marketing | $ |
| Advertising | |
| Administration | |
| Accounting Fees | |
| Depreciation | |
| Electricity | |
| Insurances | |
| Interest Paid | |
| Rent | |
| Stationery | |
| Sundries | |
| Superannuation (office staff) | |
| Telephone | |
| Wages (office staff) | |
| Financial expenses | |
| Bank charges | |
| Total operating expenses |
Budgeted income statement
/for the three months ending 30 June 2015
| Revenue | |
| Sales | |
| Less | |
| Operating expenses | |
| Marketing | |
| Advertising | |
| Administration | |
| Accounting Fees | |
| Depreciation | |
| Electricity | |
| Insurances | |
| Interest Paid | |
| Rent | |
| Stationery | |
| Sundries | |
| Superannuation (office staff) | |
| Telephone | |
| Wages (office staff) | |
| Financial expenses | |
| Bank charges | |
| Total operating expenses | |
| Net profit |
Calculate the estimated cash collections for April, May, and June:
| Collection Policy | April | May | June |
| 35% current months sales | |||
| 48% prior month’s sales | |||
| 16% second prior month’s sales | |||
| Total cash collection |
In the course of setting up the budget who will be the stakeholders that you will need to consult on one hand and communicate the forecast outcome regarding the budget?
Q2As part of a practical test at an interview for the position of an accounts assistant, the accountant gave you the below budgeted statement of financial performance and asked you to consider the budget versus actual figures given for the end of the first quarter for Take Fast Ltd and complete the table with the variance amount, percentage of budget variance to actual and if the variance is favorable or unfavorable and answer the below mentioned questions.
Take Fast Ltd
Budgeted statement of financial performance
March 20xx budget v actual
| BUDGET | ACTUAL | VARIANCE AMOUNT | VARIANCE % | VARIANCE F/UF | |
| Sale: credit (30 days) | $20,000.00 | $47,500.00 | |||
| Sale: cash | $18,000.00 | $16,800.00 | |||
| Total | $38,000.00 | $64,300.00 | |||
| Cost of goods sold | $10,000.00 | $9,000.00 | |||
| Wages | $8,000.00 | $13,000.00 | |||
| Electricity | $3,000.00 | $3,000.00 | |||
| Rent | $7,500.00 | $7,500.00 | |||
| Total | $28,000.00 | $32,500.00 | |||
| Sales contribution | $10,000 | $31,800.00 | |||
- From the figures shown, what type of business is it and what line/lines affect your answer?
- Based on the figures, what are the main aims of the business?
- If you were the manager with what would you be concerned about?
- What recommendations would you make to the client
Q3 By using the breakeven formula listed below calculate the number of units needed to break even.
Sales = Variable expenses + Fixed expenses + Profit
Contribution Income Statement
For the year ended 30 June 2015
| Total | Per unit | |
| Sales | $500,000 | $200 |
| Less variable expense | $300,000 | $120 |
| Contribution Margin | 200,000 | |
| Less fixed expenses | $150,000 | |
| Net Income | $50,000 |
| Q4)Maan Snack Bar wishes to prepare a cash budget for July, August and September. Your job as the manager is to prepare this budget and the accompanying analysis and action plan for the owners. |
| 1) Complete the cash budget below using the information following. |
| 2) Analyse the two questions relating to Maan Snack Bar’s cash position. |
| 3) Prepare an action plan for the upcoming year |
| Information provided to complete the cash budget. Use only whole dollars. |
| The closing balance for June is $10,500. |
| Cash sales:
July – $11,000 Aug – $11,500 Sep – $12,000 |
| Credit sales:
July – $14,000 Aug – $13,500 Sep – $ 15,300 |
| Cash receipts from accounts are 80% of the credit sales in the month. |
| Other income is from merchandise and is 2.5% of September cash and credit sales only. |
| Cash payments are made every month and are 27% of cash sales. |
| Payments to creditors are made every month and are 13% of total cash receipts. |
| Salaries and wages are paid every month and are $9,335. |
| Interest payments are made every month and are $1,177. |
| Operating expenses are paid, $1,223 for July, $1223 for August and $1,322 for September. Loan repayments are made every month and are $3,335. |
Manage Budget Forecast
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| Q5)You are given the following information for Maan trading research service for the coming financial year 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Expected fees | $450,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed Advertising | $7,800 per annum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advertising | 4 % of Expected fees | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest paid | $2,400 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bank charges | $300 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Administration expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting staff cost | $9,000 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stationary | $380 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation of office equipment | $9,500 per year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation of motor vehicles | $14,400 per year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rent | $3,000 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Travelling expense | $30,000 per year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Work cover | 4% of total salaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Superannuation | 9.5% of total salaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Telecommunication | $2,000 per month | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Required: Prepare annual budgeted expense for coming year 2016.- How the expenditure milestones are set up?
- Discuss what type of verifiable data and sources can provide information to prepare budgets and forecasts.
Q6)Using the results provided below in regard to the production for Coffee tables 2 and the other information. You are required to compute the direct labour budget for the coffee tables using the following information.
| Direct labour hours per coffee table | 1.5 hours |
| Cost per labour hour | $25 |
| Item | Qtr1 | Qtr2 | Qtr3 | Qtr4 | Total |
| Production units | 3500 | 4200 | 2700 | 6100 | 16500 |
| Direct labour hours per unit | |||||
| Total direct labour hours | |||||
| Direct labour cost per hour | |||||
| Total direct labour cost |
Q7)As part of a practical test at an interview for the position of an accounts assistant, the accountant gave you the below budgeted statement of financial performance and asked you to consider the budget versus actual figures given for the end of the first quarter for Take Fast Ltd and complete the table with the variance amount, percentage of budget variance to actual and if the variance is favorable or unfavorable and answer the below mentioned questions.
Take Fast Ltd
Budgeted statement of financial performance
March 20xx budget v actual
| BUDGET | ACTUAL | VARIANCE AMOUNT | VARIANCE % | VARIANCE F/UF | |
| Sale: credit (30 days) | $20,000.00 | $47,500.00 | |||
| Sale: cash | $18,000.00 | $16,800.00 | |||
| Total | $38,000.00 | $64,300.00 | |||
| Cost of goods sold | $10,000.00 | $9,000.00 | |||
| Wages | $8,000.00 | $13,000.00 | |||
| Electricity | $3,000.00 | $3,000.00 | |||
| Rent | $7,500.00 | $7,500.00 | |||
| Total | $28,000.00 | $32,500.00 | |||
| Sales contribution | $10,000 | $31,800.00 | |||
- From the figures shown, what type of business is it and what line/lines affect your answer?
- Based on the figures, what are the main aims of the business?
- If you were the manager with what would you be concerned about?
- What recommendations would you make to the client?
ASSESSMENT 3 – PROJECT
You have been asked by the owner of a consultant firm called Quick Growth to prepare the master budget. This consultancy firm consists of the owner whose charges per hour are $68 and his junior staff who are charged out at $42 per hour. The owner has advised you that the below hours are forecast for each quarter.
The consultancy has a credit system for payments with 60% of payment received the quarter in which they are earned and the remaining 40% earned the following month. The opening accounts receivable is $13,200 inclusive of GST. The GST is accounted for on an accrual basis.
A)Prepare quarterly revenue receipts forecast and cash collections forecast for the next financial year.
| Hours | Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun |
| Senior | 250 | 230 | 230 | 230 |
| Junior | 210 | 220 | 210 | 220 |
Revenue Receipts Forecasts 30-June
| Qtr | Hours | Receivables | ||||||
| Junior | Senior | Total | Junior @ 42/hr | Senior @ 68/hr | Total | GST | Total /GST inc/ | |
| Sept | ||||||||
| Dec | ||||||||
| Mar | ||||||||
| Jun | ||||||||
| Total | ||||||||
Cash Collection Forecasts 30-June
| Qtr | Receivables | Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun |
| Opening | |||||
| September | |||||
| December | |||||
| March | |||||
| June | |||||
| Closing |
B)– The owner will purchase a new vehicle in the Sept qtr for $27,500. In Dec they will purchase photocopiers for $5,500 and a computer system for $5,500 with an upgrade in March for a further $2,750. Each item is inclusive of GST. Prepare the capital expense budget for the financial year.
| Qtr | Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun | Total GST |
| Car | |||||
| Photocopier | |||||
| Computer | |||||
| Total (net GST) | |||||
| GST |
- C) All information in the below table is based on source documentation from the companies previous operations. GST expensed are shown:
| July – Sep | Oct – Dec | Jan – Mar | Apr – June | |
| Motor vehicle | 1,300 | 1,495 | 300 | 450 |
| Printing | 200 | 50 | 200 | 50 |
| Electricity | 600 | 555 | 500 | 500 |
| Rent | 4,500 | 4,500 | 4,500 | 4,500 |
Depreciation is $700 per qtr and the tax payable at 30% of net profit per qtr. Wages for the senior staff are $8,000 per qtr and junior $5,000.
Complete the expense budget, budgeted statement of financial performance; you will need to add the non GST items to the expense budget, and the cash flow budget which has an opening cash balance of $42,000. The opening GST liability is $2000 and the opening PAYG tax instalment is $2,500.
Expense Budget 30-June
| Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun | |
| CashExpenses: | ||||
| Motor Vehicle | ||||
| Printing | ||||
| Electricity | ||||
| Rent | ||||
| Subtotal GST Inc | ||||
| GST | ||||
| Net of GST | ||||
| Wages Senior | ||||
| Wages Junior | ||||
| Subtotal cash items | ||||
| Depreciation | ||||
| TOTAL |
Budget Statement of Financial Performance 30-June
| Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun | Liability | |
| Service Revenue | |||||
| Less Expenses | |||||
| Sub Total | |||||
| Income Tax 30% | |||||
| Net Profit |
GST Budget – 30-June
| Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun | Liability | |
| GST collected on sales | |||||
| GST paid on exp | |||||
| GST paid on capital acquisitions | |||||
| Net GST |
Budget Statement of Cash Flows 30-June
| Jul – Sep | Oct – Dec | Jan – Mar | Apr – Jun | ||
| Opening cash | |||||
| Add collections from revenues | |||||
| Total cash available | |||||
| Less estimated cash payments | |||||
| Cash payments in expense budget | |||||
| Capital expenditures | |||||
| GST payments | |||||
| Tax payments | |||||
| Total | |||||
| Closing cash balance | |||||
D) Use the cashflow budget to prepare a graph of quarterly revenue received, payments made and closing cash positions.
E) Explain the graph created in question 4 by answering the below questions:
- Which month has the highest payments and what has caused this.
- What advice would you give with regards to the purchase of capital items?
- Approximately what effect would not purchasing the capital items have
- Which month has the highest revenue received?
- Describe the position of closing cash throughout the year. The owner realizes that there will be significant expenses in this first year of operation. Identify in which quarter the milestones of revenues exceeding expenditures occur. What effect does this have on cash?
- What advice would you give about the paying of a $1000 bonus to the junior staff in June promised in the Sep qtr. Based on the staff’s performance and the financial performance of the business for the year?
F)Suppose that Quick Growth has non-current assets valued at $55,000 with accumulative depreciation at the beginning of the year of $20,000. Use the depreciation expense for the forecast year and other relevant items to complete the budgeted statement of financial position as at 30th June. Assume no depreciation on new non-current assets and all equity is represented by retained profits.
Budgeted statement of financial POSITION 30-June
| Cash at Bank | ||
| Accounts receivable | ||
| Total current assets | ||
| Noncurrent assets | ||
| Less depreciation | ||
| Car | ||
| Computer systems | ||
| Photocopier | ||
| Total assets | ||
| Liabilities | ||
| GST | ||
| Tax | ||
| Total liabilities | ||
| Net assets | ||
| Owners’ equity | ||
| Retained profits |
G)What makes setting budget account assumptions time consuming for Quick Growth and what must it consider? Discuss.
ASSESSMENT 4: Online Assessment
Please read the assessment requirements below.
Online Assessment Quiz
You will be able to access this online for this unit, you need to talk to your facilitator/teacher on how to access this resource.
This assessment is due on
