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Assessment Task 1
List 8 examples for financial records

1.General account books

2.Cash book records

3.Banking records

4.Creditors’ records

5.Debtors’ records

6.Details of any contracts

7.Tax invoices and other relevant tax records

8.Stock records

List 4 different types of budgets

1.master budget

2.wage budgets

3.cashflow budgets
4.project budgets

What is the purpose of preparing a draft budget?

As draft budget is prepared according to the organizational accounting procedures and in this budget,
we cover all relevant areas. A draft budget provides the draft information about the budget for
managers and employees from different relevant departments and area to negotiate, analysis and
adjust the budget and prepare budget more relevant and achievable. The Purpose of the preparing a
draft budget is to manage the income and expenditure of a business.

What should you do with the feedback from the draft budget?

Consulting with him or her who provides the feedback, and negotiate with relevant parties, he makes
appropriate adjust actions to correct the budget.

List 2 people the final budget might need to be distributed to.

1) Relevant department managers: -These are those managers who have budget with the concern
department.
2) The owner of the business: - These are the stakeholders who are directly related to the project

Why is it important for each department head to understand their part of the budget?

Each department head should understand their part of the budget and how it contributes to the overall
business. With the understanding of budget, management team have a clear goal of their works. Also,
by being provided a budget as a guidance to monitor and manage, they could aware which area did not
perform incompliance with the budget, and analysis the reason behind a guidance could facilitate
management department heads to provide quick and useful feedback for finance department to adjust
the budgets.

Why should all staff have some knowledge of the budget for their area?

By being advised of the importance of budgetary control and meeting the budget each month, staff
could have a better understanding of the overall object of them works, be aware of the meaning of their
work, somehow be motivated by the department to achieve the budget.

Once the final budget has been approved, how often should it be monitored?

The budget should be compared to the actual accounting results on a monthly basis to ensure that the
business is performing as expected. Small business owner may think it is not necessary for them to
monitor the budget that frequently, but to ensure the success of the business, it is a step which must be
undertaken
As well as receiving the final budget the management team should be advised of their reporting
duties. What should their report contain?

The reports included will depend on the size of the business. A small business may only include the
profit and loss statement, balance sheet, and Cashflow statement, whereas a larger business would also
include departmental reports, a sales report and any number of other reports. The exact reports
included will depend on the polices of the business and the depth of reporting preferred by the owners,

Name 2 financial reports you might generate from your accounting system to check your budget
against actual income or expenditure.

1. Profit and Loss statement

2. Statement of Cashflow

Every revenue and expense item on the Profit and Loss Statement should be compared to what?

Every revenue and expense item on the profit and loss statement should be compared to every
forecasted cost item on budgets.

When revenue variances occur, why should you talk to the staff to help identify, and find options to
Address the issue?

Revenue variances should be analyzed and improvements suggested by staff within the department as
well as manager. Because, often the staff on the front line will have more of an idea of the reasons for
the variances and will be able to give suggestions for improvement.

List 2 factors that can cause variances in staff budgets.

1: The level of staff efficiency Factor

2: The wage rate of staff

List 3 colleagues you may advise if you noticed that there were deviations between your budget and
your targets.

1. The operational staff

2. The administration of financial staff

3. The department managers

List 2 ways you might research new approaches to managing your budget.

1. Analyzing internal factors—investigating changes in management

2. Analyzing external factors—investigating changes in external parties like suppliers

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.

The report needs clearly explaining the idea, costs, reasons for the change, benefits to the department
and overall benefits to the business.

1). How much money it will cost?

2). How much money it will save and over what time period?

3). A range of financial reports, or statistical data to help demonstrate your reasoning.

If you are cutting expenditure, why must you be careful that the cuts do not cause the level of service
and product to fall?

Cutting expenditure often entails cuts to staff numbers, stationery and other expenses that are often
seen as unnecessary. The danger with this approach is that the level of service and product quality can
fail. Any reduction in the level of service quality can impact on the long-term viability of business

Name an accounting program you can use to help manage budgets.

MYOB

Assessment Task 2
Task 1

Item July August

Budget Actual Variance Budget Actual Variance
Sales 230,000 225,000 5000 230,000 228,000 2000
Revenue
Food Costs 85,000 87,000 2,000 85,000 86,000 1,000
Beverage 14,000 15,000 1,000 15,000 15,000 0
Costs
Labor Costs 77,000 82,000 5,000 78,000 82,000 4,000
Fixed Costs 35,000 35,000 0 35,000 35,000 0
 Total Costs 211,000 219,000 8,000 213,000 218,000 5,000
Profit 19,000 6,000 13,000 17,000 10,000 8,00

The Hotel owners and managers would like to know from you the major areas of concern

where there is a deviation that needs further monitoring and improvement.

Monitoring budgets is important that help business to catch any variances in time, to reduce cost and
meet the target. If business can realize that there are issues early enough, it will able to adjust the
problems and arrange other strategies to compensate. That why budget should be monitored regularly
throughout the year.

Explain the importance to the owners of monitoring budgets and why do you think it will help them to
manage their finances better for the business.

Monitoring budgets is important that help business to catch any variances in time, to reduce cost and
meet the target. If business can realize that there are issues early enough, it will able to adjust the
problems and arrange other strategies to compensate. That why budget should be monitored regularly
throughout the year.

Explain to them the use of analyzing the monthly budget and comparing the forecasted budget
against the actual budgets.

A budget to actual variance analysis is a process by which a company's budget is compared to actual
results and the reasons for the variance are interpreted. The purpose of all variance analysis is to
provoke questions such as: Why did one division, product line or service perform better (or worse) than
the others? This is called “reforecasting”. Over time, your forecast and budget will begin to look
different – only coming together again when you do your next budget.

Explain your findings and possible reasons for these variances.

 Errors by the creators of the budget can occur when the budget is being compiled. ...
 Changing business conditions, including changes in the overall economy or global trade, can
cause budget variances.
 Change in market price.
 Change in delivery cost.
 Emergency purchases which may be due to upsets in production program, slackness of store
keepers, non-availability or funs etc.
 Inefficient buying.
 Untimely buying.
 Non-availability of standard quality of material.
Research and suggest what improvements do you think the owners can take to improve this
situation?

In research from the website https://smallbusiness.chron.com/increase-sales-revenue-5-essential-

strategies-72413.html, the site provides some strategies to increase sales & revenue. Roughly some
points like increase marketing, review pricing strategies and expand distribution channels. After doing
the research, there are some suggestions to improve the business. Owner didn’t monitored budgets in
July and only increased the cost in August. But on the same time, owner didn’t increase in sale revenue,
even the figure shown that the profit variance reduced in Aug but actually it was not improved. First of
all, owner should prepare an operating budget – reset the revenue, expenditure and profit targets in
September, referring the figures from July to August. Consider the operational budget and contingency
plan. Into practice the budget, owner should inform management to observe and report the guest
dining performance. They should calculate how many guests dine in hotel restaurant during each service
period also room service. Calculate how much food guest will order and spend per table. Figure it out
arrange corresponding staff to on shift and cut the food costs to reduce the food and beverage
expenditure and labor costs.

To increase the sales revenue, owner can provide some promotion such as provide coupon, buy one get
one drink, happy hours offer, seasonal food for guest to attract guest dine in and increase the sales.

Task 2 – Variance Analysis Note