SITXFIN003

Manage Finances within a budget

UKA (Unit Knowledge Assessment)

Q1. List 8 different types of financial records.

1. Bank statements
2. Invoices and receipts
3. Business activity statement
4. Bank Deposit Documentation
5. Banking Summaries
6. Cheque Books
7. Credit Card Transaction Statements
8. Invoices
9. Labour and Wages Reports
10. Merchant Statements

Q2. Which types of business must file a Business Activity Statement? What are the
components of a Business Activity Statement? [25-50 words]
The businesses that are registered for GST must file a Business Activity Statement.
The components of Business Activity Statement:
 Total sales
 Export sales
 GST-free sales
 Capital purchases
 Non-capital purchases
 Record of wages
 Tax withheld from wages (PAYGW)
 Other withholdings
 PAYG instalment (PAYGI) income
 A summary of the GST collected
 PAYGI and PAYGW owing
 GST Paid
Q3. Explain each of the following what procedures should be followed when collecting data
to inform budgets. [75-100 words]
Cash flow budget Book page 7

Capital expenditure budget Book page 8

Sales budget Book page 8

What procedures should be followed when  Collect data

collecting data to form budgets  Consult with staff
 Discuss the draft budget
 Gather feedback
 Give feedback to all stakeholders
 Maintain detailed records

Q4. Define the following type of budgets by briefly describing their scope [30-50 words]
each.
a) Wage budget:

Covers employment costs, including superannuation, payroll tax (if applicable),

recruitment costs and training.

b) Purchasing budgets:

Known as expense budgets, they show the projected expenditure of the business.

c) Events budgets:

These budgets are used for planning the costs of any event. Such as: conference.

d) Project budgets:

This is prepared prior to a new project commencing.

Q5. The following factors must be considered in the preparation of financial and statistical
reports. Provide a brief explanation of each factor by explaining the scope and the
information it provides. [100-160 words]
Cashflow These show movement of the bank accounts
of a business. They show the current cash
on hand, forecast when money is likely to
come into the businesses, and when
disbursements (money going out) are due.
Occupancy Rate Used to analyse the occupancy level of the
establishment. Hotel Reservations/Front
Office Management construct this rate is
based on the number of rooms booked each
night, as well as the number of guests.
Sales Performance These are used by managers to analyse the
revenue performance of each department
compared to budget and to find any weak
spots.
Variance in income/expenditure Highlights deviations from the budget,
between actual income/expenditure and the
forecasted amount.
Expenditure The register of the outgoings of a business
in conducting its operational activities.
Cover Calculated by restaurants and bars to record
and allow analysis of the number of guests
served in a service period.
Stock levels These show the closing stock level at the
end of the period.
Wastage Each time an incorrect beverage is made or
a stock item goes off, it must be recorded in
the wastage report. This report allows
management to determine the reason for
variances between income produced and
stock used up.

Q6. What is the purpose of preparing a draft budget? What are some possible benefits? [25-
50 words]
Purpose of draft budget:
 Forecast the financial resources needed for the business operations
 Get an idea of upcoming revenue and expenditures
Benefits of draft budget:
 Provide guideline for income and expenditure
 Helps to organize business activities
 Encourage staff
 Gives chance to evaluate business and staff performance
Q7. In analysing a budgets results and ensuring it is effective in providing insight into a
business’ financial performance, what must you compare every revenue and expense item on
the profit and loss statement with? [10-20 words]
The actual performance figures for the business after a budget period.

Q8. List 3 things you need to include in your budget report, to give the decision maker
enough information to do a clear cost versus benefit analysis of the budget request.
 Projected revenue
 Projected expenditures
 Timeframe
Q9. What are the 5 main components of an Operating Budget?
 Revenue
 Purchases and Cost of Goods Sold (COGS)
 Wages
 Operating Expenses
 Profit and Loss Statement
Q10. Define the following Budget Terminology.
Variance The difference between the actual figure and
figure that was projected.
Projected/Forecasted Figure A prediction of what the future figures may
be, based on previous earnings, known costs
and expenses.
Actual Figure A known amount which has been achieved
or is constant.
Budgeted Figure The amount of money allocated for the
financial year.

Q11. Why is it important that staff understand a budget and associated target? [25-75 words]
 Staff can know the sales targets
 Staff can know the limits for all expenditures
 Helps staff to achieve their goals
 They can contribute to make more profit by applying different sales techniques
Q12. Which key processes need to be followed and analysed when reviewing and updating a
budget? Explain your answers with examples relating to the Hospitality Industry. [50-100
words]
The budget must be reviewed on a regular basis to ensure that it is still relevant. Factors such
as price increases, significant downturns in customers and changes in operations can mean
the budget should be updated throughout the year. If a significant event occurs, there is no
point in keeping the old budget and trying, unrealistically, to meet it. You are better off
amending the budget to reflect both internal and external changes on a regular basis. This will
ensure that the budget remains up-to-date and relevant throughout the year. In order to amend
the budget, analysis should be completed of the business internally, as well as any external
factors which may have an impact.
Has one of your suppliers increased prices significantly? An investigation should be done
into other suppliers and their costs versus the quality of the products offered. The important
thing to remember, just as when you are setting the budget in the first place, is to ensure that
the products you sell will be of a high quality and good service can be provided.
 USA (Unit Skills Assessment)
Part 1:
Task 1:
Fill up the table: (Must show all calculations)
2019 Budget
Department Allocated Funds
Operations $2412025
Marketing $689150
Finance $1033725
Human Resources
Total Expenditure $6891500

 The NBH forecasts its revenue for 2019 to be $9,845,000

 Total expenditure is 70% of the total revenue
 The NBH forecasts that their profit margins are 30% of total revenue
Within the 2018 budget:
 Operations department received 35%
 Marketing department received 10%
 Finance department received 15%
 Human resources department received 40% of the total expenditure
Calculations:
Revenue: $9845000
Expenditure: 70%
Total expenditure: 70 * 9845000/100 = $6891500
Total expenditure: $6891500
Allocated funds:
Total expenditure: $6891500
Operations department: 35%
Operations department allocated funds: 35 * 6891500/100 = $2412025
Operations department allocated funds: $2412025
Marketing : 10*6891500/100 = $689150
Finance: 15*6891500/100 = $1033725
HR: ……………..
Task 2:
Present all explanations with calculations:
Operations department:
The operations department informs their representative that in the 2018 budget they had a
shortfall of $137,830 in their allocated budget and the funds they required. As such they
inform their representative that they cannot incur the same shortfall this year and request that
the budget be amended. They also inform their representative that an additional $206,745 is
required in the 2019 budget to facilitate the growth objectives of the organisation.
Allocated fund: $2412025
Shortfall: $137830
To facilitate the growth objectives additional need: $206745
Total additional requirement: $137830 + $206745 = $344575
Total fund: $2412025 + $344575 = $2756600
Marketing department:
The marketing department informs their representative that they only used 80% of their
allocated funds from the 2018 budget. They believe the same will happen in 2019 and the
extra 20% will remain in excess.
Allocated fund: $689150
Used: 80%
Actual fund used: 80 * 689150/100 = $551320
Actual fund: $551320
Finance department:
The finance department informs their representative that they have implemented new
accounting processes and have purchased new cost saving software. As such, they believe
that in 2019 they will save $551,320 of their forecasted expenses by implementing the new
accounting process and by using new cost saving software.
Allocated fund: $1033725
Savings: $551320
Expenditure: 1033725 – 551320 = $482405
Actual fund: $482405
Human resources department:
The human resources department informs their representative that in order to facilitate the
organisations growth objectives in 2019, they will need to hire more staff. They determine
that the extra staffing costs will be 3.5% of the total forecasted revenue. As such, they require
additional funds.
Total forecasted revenue: $9845000
The human resources department needs an additional: 3.5%
The additional amount: 9845000 * 3.5/100 = $344575
Total allocated fund: 2756600 + 344575 = $3101175
Actual fund: $3101175

1. Fill up the table: (Must show all calculations)

2019 Budget
Department Allocated Funds
Operations $2756600
Marketing $551320
Finance $482405
Human Resources $3101175
Total Expenditure $6891500

2. Fill up the Budget Review Form:

Budget Review Form
Names of Department Representatives Who Developed the Budget
Operations department: Mike
Marketing department: Simon
Finance department: Lily
Human Resources department: Laura
Date of Review: 07.01.2020
Budget Year in Review 2019
Have all the departments received satisfactory allocation of funds? If no, please explain.
Answer:
Yes, all the departments received satisfactory allocation of funds.
Have there been any changes to the allocation of funds, from the previous year’s budget? If
yes, please explain the extent of the changes and why they were necessary.
Answer: …………..

Does the budget allow for the desired profit margin of 30% of total revenue to be
achieved? If no, please explain.
Answer:
Yes, desired profit margin is achieved. Expenditure is only 70% of total revenue.
Reviewers Signature: Your name
Date: 07.01.2020
Task 3:
Explain the points below:
1. What changes were made in the budget:

(Check Task 2 and write)

…………………………………..

2. Why the changes were necessary:

(Check Task 2 and write) (Write the reasons for changing the budgets)

…………………………………………………

3. Why budgeting correctly is important for the organisation:

https://bethebudget.com/why-is-budgeting-important/

…………………………………….

4. Why it is necessary to follow the budget accordingly:

https://www.thebalance.com/reasons-to-budget-money-2385699

………………………………………..
Part 2:
Task 1:
Actual Performance Figures 2019
Revenue $9624428
Department Expenditure
Operations $2536072
Marketing $606452
Finance $482405
Human Resources $3287246
Total $6912175

1. Write down the differences in percentage for expenditures for each department:
(Must show all calculations)

Example:
Operations department:
Allocated funds: $2756600
Expenditure: $2536072
Difference: 2756600 – 2536072 = $220528
Percentage: 220528 * 100/2536072 = 8%

Operations: 8%

Marketing: 606452 – 551320 = 55132 *100/606452 = 9.09 = 10%

Finance: same amount

HR: $3287246 - $3101175 = $186071 *100/3287246 = 5.66 = 6%

Total:

 Operations department used 8% less than forecasted

 Marketing department used 10% more than forecasted
 Finance department used same amount that were forecasted
 Human Resources department used 6% more than forecasted
 Overall budget deviation of only 0.3%
 2. Fill up the Annual Year-End Financial Performance Review Form:

Annual Year-End Financial Performance Review Form

Name of Reviewer: Your name
Date: 10.01.2020
Year in Review: 2019
What was the profit for the year in review? Please provide a short description and
justification.
Answer:
The profit for the year in review was $2,712,253. The profit was achieved through accurate
budgeting and successful operation of the hotel.
Was there any exceptional financial activity which has caused the year in review’s
financial performance to be different from previous years? If yes, please explain.
Answer: …………….

Were there any deviations greater than 5% in the year in review from the budget?
Answer: ……………..

Has the year in review met its investor return requirements of $2,000,000? If not, please
explain.
Answer: Yes, the profit exceeds $2,000,000.
Signature of Reviewer: Your name

Task 2:
 1. E-mail to Manager:
Date: 08.09.2021
To: [email protected]
CC: [email protected]
BCC: [email protected]
From: [email protected]
Dear Barry,
Hope you are doing well. I am writing this e-mail to you to inform you regarding the
performance of each department and other related information.
The performance of each department:
…………………………………………
Any significant deviations from the budget:
………………………………
Action is required:
………………………………
Possible causes for the deviations:
Possible causes may include changes in external conditions, poor reporting, poor review
requirements, unrealistic budget targets, etc………………………
Suggestions for appropriate options for effective management:
……………………………………..
Hope this information will help you to get an overall picture of the financial situation of the
company.
Thanking you.
Kind regards.
Your name

2. Reviewing budget:
https://www.nibusinessinfo.co.uk/content/reviewing-your-business-budget-regularly

Part 3:
Task 1:
Provide data: (Determine all percentages and show the calculations)
Operations:
Example: Room Cleaning:
NBH Figures: $564040
Industry Average: $452924.12
Difference: 564040 – 452924.12 = $111115.88
Percentage: 111115.88 * 100/564040 = 19.7%
 Room Cleaning – exceeds industry average by 19.7%
 Room Furnishing – below industry average by 11%
 Building Maintenance – below industry average by 11%
 Utilities – exceeds industry average by 28.6%
 Lobby Cleaning – below industry average by 12%
 Hotel Management Software – below industry average by 44%
 Landscaping – below industry average by 47.7%
 External Operators Fee – exceeds industry average by 0.28%
Human Resources:
 Staffing – below industry average by 10%
 Professional Development Costs – exceeds industry average by 46.6%
 Counselling and Personal Services Costs – exceeds industry average by 65%
 Recruitment Costs – below industry average by 29.5%
Finance Department:
 Accounting and Reporting costs - exceeds industry average by 1.25%
 Payroll software – exceeds industry average by 13.4%
Marketing:
 Website and Digital Management – below industry average by 12%
 Sponsorship - exceeds industry average by 4.76%
 Promotions - exceeds industry average by 1.57%
 Merchandising Costs – below industry average by 34.8%
Areas for improvement:
 Room Cleaning
 Utilities
 Professional Development Events Hosting Costs
 Counselling and Personal Services Costs
 Payroll Software
Task 2:
 E-mail to Manager:
Date: 15.09.2021
To: [email protected]
From: [email protected]
Dear Barry,
Hope you are doing well. I am writing this e-mail to you to inform you regarding the different
budget management approaches and their advantages and disadvantages.
Name Advantages Disadvantages Impacts
1. Incremental Budgeting ……………… ……………… ………………………..
2. ………… ……….. …………. ………….
3. …………………………… …………… ……………. ……………
4. ……………………… ………………. ………………… ……………………

My recommendation:
I want to recommend ……………………………………………………….
Hope this information will be helpful for you. Please contact me if you have any query.
Thanking you.
Kind regards.
Your name

Part 4:
Task 1:
Fill up the internal reporting form:

Finance Department – Internal Reporting Form

Name of Reviewer: Your name
Date of Review: 01/01/2020 – 31/03/2020
Was the previous year budget and the approach adopted successful in managing the
financial resource allocation requirements for the NBH?
Answer:
Yes, the previous year budget was successful in managing the financial resource
allocation for the NBH.
Are there any recommended changes to the budgeting approaches for the year ahead? If
so, please explain.
Answer: …………………………………………

How would the recommended changes impact upon the organisations departments?
Answer: …………………………………..

Has the recommendation been presented to the correct authority in the finance
department? If so, who was it presented to and how was it presented?
Answer: …………………………………….

Signature of Reviewer: Your name

Assessment submission:
UKA: 12 questions
USA: All Tasks
Word or PDF file (UKA and USA tasks)