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ASSESSMENT 2

BSB51918
Diploma of Leadership and Management
Course Name
BSB51415
Diploma of Project Management

Subject/module Financial Management 1

Part A: Written Responses

Assessment method
Part B: Written Responses

Weighting 50%

BSBFIM501
Unit of Competency
Manage Budgets and Financial Plans

Instructions
1. Assessments should be completed as per your trainer’s instructions.
2. Assessments must be submitted by the due date to avoid a late
submission penalty.
3. Plagiarism is copying someone else’s work and submitting it as your
own. You must write your answers in your own words and include a
reference list. A mark of zero will be given for any assessment or part of
an assessment that has been plagiarised.
4. You may discuss your assessments with other students, but submitting
identical answers to other students will result in a failing grade. Your
answers must be yours alone.
5. Assessments must be submitted through the submissions folder in
myAPC.hub in MS Word format where possible, or in PDF as per your
trainer’s instructions. Cover sheets are to be submitted as separate files.
(Note if you do not have Microsoft Word software on your computer you
can work in Google docs and download your completed task in the MS
Word format prior to submission upload)
6. You must attempt all questions.
7. You must pass all assessments in order to pass the subject.
8. All assessments are to be completed in accordance with WHS regulatory
requirements.

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Part A – Written Responses

1. List TWO sources of information that may help a manager to estimate the cost
for the coming year.
2. Identify and briefly describe THREE examples of external banking records
which are used for the purpose of record keeping
3. List the relevant personnel you may communicate with in the organisation,
to ensure that documented outcomes and information about customers,
competitors and business competitors can more easily be obtained.
4. What is a contingency plan? Explain the reasons for a contingency plan? What
are the steps to follow to prepare and develop a contingency plan? List THREE
specific areas to include in the plan.
5. What is a financial plan? What should financial plans include?
6. What are the external and internal factors that may affect the financial
planning?
7. What is a budget? What are the objectives of a budget? What is the role of the
master budget?
8. Scenario: You are an accountant for APC Bikes, a manufacturer of sturdy
mountain bikes for intermediate-level bikers. The variable costs per bike
include:
Direct materials:
Wheel/tyres $20.00
Components $70.00
Frame $50.00
Total direct materials $140.00
Direct labour $39.75
Variable overhead $75.00
Total cost per bike $254.75
You decide to create a budget variance analysis that reflects the actual
volume of sales. The budgeted selling price is $800 (per bike). The budgeted
fixed costs of manufacturing overhead is $20,200,000 and the budgeted
support department costs is $32,956,430.
Using the following template to create a budget variance analysis including the
calculation of variances.
Flexible Favourable /
Actual Variance
budget Unfavourable
Bikes sold 113,500 113,500
Revenue ? $90,500,000 ? ?
Production costs:
Variable ? $29,492,408 ? ?
Fixed overhead ? $19,400,000 ? ?
Support
? $37,565,337 ? ?
department costs
Net income ? $4,042,255
Total variance ? ?

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Notes:
f You are required to fill in the place with “?” only.
f Flexible budget is a budget that reflects a range of operations in which
fixed and variable costs are separated to more accurately reflect the
effects of activity levels on cost.
f Favourable variance is a variance in which actual revenues are larger
than the budget, or actual costs are lower than the budget.
f Unfavourable variance is a variance in which actual costs are greater than
budgeted, or actual revenues are less than budgeted.
Tasks for Question 8:
i. Complete the above flexible budget variance report
ii. Based on the schedule, what is your opinion about the entity’s
performance?
iii. What actions are you going to take based on the flexible budget variance
analysis?
9. What is a good cash management?
10. What is cost-volume-profit (CVP) analysis and how is it used in decision
making?
11. Scenario: APC Bikes, a manufacturer of sturdy mountain bikes for
intermediate-level bikers. Due to the increasing popularity of cross-country
cycling, the management of APC Bikes wants to produce a new mountain
bike. After discussions with the sales and production teams, management
has forecast the following information:
Price per bike $800
Variable cost per bike $300
Fixed costs related to bike production $5,500,000
Targeted pre-tax profit $300,000
Targeted post-tax profit $210,000
Tax rate 30%
Required: Calculate breakeven in units and total revenue.
12. Goods and services tax (GST), which was introduced in July 2000, is a broad-
based tax of 10% of most goods, services and other items sold or consumed
in Australia. Describe the THREE types of supplies under the GST legislation.
13. Scenario: Brian is running an ice cream shop. He paid $9.50 per hour for
3,950 hours of working in packing 40,000 buckets of ice cream. The standard
labour rate is $8 per hour. How much is the direct labour price variance (i.e.
the difference between the actual price for labour and the standard price)?
Is the variance favourable or unfavourable? List the possible reasons for this
variance?
14. When evaluating financial information systems, what factors will you need to
consider?

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Part B – Written Responses

Answer the following questions:
1. a. The accounting procedures of most businesses involve basic steps
that are carried out in a set order. The flow of data through these
procedures is known as the accounting cycle. List FIVE (5) basic steps
that are included in the accounting cycle.
b. The system used to process the information from source documents to
the stage of financial reports is called the Double Entry System. One of
the principles of double entry accounting is that each source document
can be recorded in two parts: one debit and the other credit. What is the
golden rule of double entry bookkeeping?
2. Depending on the size and complexity of the operation there can be many
stakeholders in the budget setting process. List and briefly explain TWO (2)
stakeholders who may be involved.
3. What is cash flow? Give one example of how an organisation can control its
cash flow.
4. a. The ABC Company collects cash from its sales as follows:
• 50% are cash sales, so collection is at time of sale.
• 40% in the month after sale.
• 10% in the second month after sale.
Expected sales for the next six months are:

July August September

$40,000 $50,000 $60,000
October November December
$70,000 $80,000 $90,000

Required: Prepare a cash receipts budget for the period from October to
December.

The ABC Company

Cash Receipts Budget
For the period from October to December
Jul Aug Sep Oct Nov Dec
Sales $40,000 $50,000 $60,000 $70,000 $80,000 $90,000
Collections:
1 month 40%
2 months 10%
Collections from Accounts Receivable
Cash Sales
Total Receipts from Sales

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b. The XYZ Company purchases for the next three months are expected to
be as follows. All purchases are paid for in the same month. Ignore GST.

January February March

$10,000 $12,000 $14,000

Operating expenses are forecasted as follows:

Insurance (payable in March) $1,200 per year

Telephone (payable in January) $600 (for 3 months)
Electricity (payable in January) $300 (for 3 months)
General Office Expenses $100 per month plus 1% of purchases
Office Wages January $525
February $1,613
March $391
General office expenses include $50 per month for depreciation.
Required: Prepare a cash payments budget for the period from January to
March.

The XYZ Company

Cash Payments Budget
For the period from January to March
January February March
Purchases
Insurance
Telephone
Electricity
General office expenses
Office wages
Total Cash Payments
5. When collecting data for analysis what are the two sources we can get data
from?
6. How can data collected help an organisation determine the effectiveness of
their financial management processes?
7. What are some factors that could affect a budget?
8. Budget/Financial Plan Exercise
Using the following information work out the answers for the questions
below:
• 160-seat restaurant
• Average spent at lunch $16.50

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• Lunch seat turnover 80%

• Average spent at dinner $25.50
• Dinner seat turnover 70%
• Restaurant open for lunch 260 days a year
• Restaurant open for dinner 312 days a year
a. What are the projected sales for lunch?
b. What are the projected sales for dinner?
c. What are the projected total annual sales for the restaurant?

– END –

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