Assessment Task 2

SITXFIN003 Manage finances within a budget

Assessment Submission details:

1. Please include following details on the top of your assessment:

 Your Name
 Your Student Id
 Your Trainer’s name
 Title of your Assessment
 Assessment Due Date
 Actual Submission Date
Please Note: Any changes in the assessment due date must be approved by your trainer.

2. This assessment must be in Microsoft word format. Following settings should be made for this assignment
to keep consistency among all the assessments:

Body text Page setup

 Font: Times New Roman  Top: 2.54 cm 

 Font size: 12 point  Bottom: 2.54 cm

 Line spacing: Double   Left: 3.17 cm

 Text style: Normal  Right: 3.17 cm

 Header: 1.25 cm

 Footer: 1.25 cm

3. Do not forget to attach the Cover Sheet at the front of the assessment.
4. Make sure you have signed the Cover sheet to declare this is your own work.
5. You can e-mail this assessment to your trainer’s e-mail address with following details:
In ‘subject’ mention your ‘student Id – Your name’.

Achieving Competence:

To be deemed competent in this assessment you must:

 Correctly address all of the assessment requirements as described in this task

 Correctly address all of the submission instructions
 Successfully complete the Assessment Questions
 Submit assessment on or before the due date with an assessment cover sheet
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Performance objective:

The purpose of this assessment is to assess your ability to complete tasks outlined in elements and
performance criteria of this unit in the context of the job role, and:

a) manage a budget for a business over a three-month period that meets the specific business’ needs
b) undertake at least two of the following to inform management of the above budget:
o discussions with existing suppliers
o evaluation of staffing and rostering requirements
o evaluation of impact of potential roster changes
o review of operating procedures
o sourcing new suppliers
c) monitor income and expenditure and evaluate budgetary performance over the above budgetary life
cycle
d) complete financial reports related to the above budget within designated timelines and using correct
budget terminology

Assessment description:
This task consists of 3 parts, Part A, Part B & Part C.
For Part A you are required to complete a budget analysis.

For Part B you are required to answer questions relating to the importance of monitoring and analysing budgets
and identifying methods to rectify shortfalls.

For Part C you have been provided with the projected data sheet for reference in the spread sheet. Please use
the spread sheet file to complete the calculations.

PART A

Case Study Analysis on Budget Variance

Top of the Town Hotel has asked you to calculate the variance for the following figures for the month of July and
August. Also calculate the total profit that was budgeted and actual. Analyse the findings and inform them about
the variance as they are concerned and would like to monitor the income, expenditure, profit levels, budgetary
performance of their Food and Beverage Department.

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Item July August

Budget Actual Variance Budget Actual Variance

Sales Revenue 230,000 225,000 5,000 230,000 228,000 2,000

Food Costs 85,000 87,000 -2,000 85,000 86,000 -1,000

Beverage Costs 14,000 15,000 -1,000 15,000 15,000 -

Labour Costs 77,000 82,000 -5,000 78,000 82,000 -4,000

Fixed Costs 35,000 35,000 - 35,000 35,000 -

Total Costs 2,11,000 2,19,000 -8,000 2,13,000 2,18,000 -5,000

Profit 19,000 6,000 13,000 17,000 10,000 7,000

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.

PART B

Answer the following questions.

Questions:

1. 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.

To set up the patterns of business successfully and to establish the identity of chances of development that is
so much necessary for the owners of the business for watching over all the budgets.

In this way the owners of the business fall back to make some improvements in the areas of business having
inclination to over expenditures and over spendings.

Hence it generates the basis to produce the profit of business in relation to losses that are incurred. Budget
monitoring mainly assists to awareness of the things maintaining large pertinence in the profitable business
houses operation(Dabrowska,2016).

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 The budgeted amount should always meet in this approach among the things of managing the expenditure
things. If there are revenue or sales things, the company must reach above the amount of budget to experience
convenient budget variance.

If make a summary of wide views, the watch over of the budget maintains the relevance along with the
establishment of any of the very weak areas. Additionally it contributes to form the basis of business
operations and adjusting the problems that are likely to occur.

2. Explain to them the use of analysing the monthly budget and comparing the forecasted budget against the
actual budgets.
purpose of the budgeting process is to provide a budget figure for each budgeted item. As time

passes,actual spending and revenues enter the list to compare with original budget figures. The key

difference between a budget and a forecast is that a budget lays out the plan for what a business wants

to achieve, while a forecast states its actual expectations for results, usually in a much more

summarized format.In essence, a budget is a quantified expectation for what a business wants to

achieve. Its characteristics are:

The budget is a detailed representation of the future results, financial position , and cash flows that
management wants the business to achieve during a certain period of time.

The budget may only be updated once a year, depending on how frequently senior management wants to
revise information.

The budget is compared to actual results to determine variances from expected performance.

Management takes remedial steps to bring actual results back into line with the budget.

The budget to actual comparison can trigger changes in performance-based compensation paid to
employees.

Conversely, a forecast is an estimate of what will actually be achieved. Its characteristics are:

The forecast is typically limited to major revenue and expense line items. There is usually no forecast for
financial position, though cash flows may be forecasted.

The forecast is updated at regular intervals, perhaps monthly or quarterly.

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The forecast may be used for short-term operational considerations, such as adjustments to staffing,
inventory levels, and the production plan.

There is no variance analysis that compares the forecast to actual results.

Changes in the forecast do not impact performance-based compensation paid to employees.

Thus, the key difference between a budget and a forecast is that the budget is a plan for where a business
wants to go, while a forecast is the indication of where it is actually going .

3. Explain your findings and possible reasons for these variances.

The result could be greater income than originally forecast. Conversely, an unfavourable variance occurs when

revenue falls short of the budgeted amount or expenses are higher than predicted. ... If the variances are

considered material, they will be investigated to determine the cause.

4. What improvements can be done to overcome the variance between forecasted and actual budget?

Part C

Variance Analysis

Note

You have been provided with the projected data sheet for reference in the Spread sheet.

Please use the spread sheet file to complete the calculations.

In this part you are provided with an excel file with 2 spread sheets (Budgeted Rooms Revenue Sheet, Actual
Rooms Revenue sheet)with the actual figures on the rooms for a given quarter. You are required to calculate the
actual revenue that has been generated for each month in the given quarter based on the actual occupancy
rate.

Calculate the following details using the appropriate sheet as per the given instructions

Budgeted Rooms Revenue Sheet

Refer to the projected data sheet.

 In this sheet first calculate the total projected/forecasted revenue per room type for all 365 days.
 You are also required to calculate total projected/forecasted revenue per room type for each month for
Jan, Feb and Mar.
 Calculate the total rooms for each month
 Calculate the Total Revenue for all room types for each month
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  Calculate the total projected revenue for 3 months (Jan, Feb and Mar)

Actual Rooms Revenue Sheet

 In this sheet you are provided with the Actual occupancy for each month.
 Calculate the Revenue per room type for each month (Jan, Feb and Mar)
 Calculate the total rooms for each month
 Calculate the Total Revenue for all room types for each month
 Calculate the Variance for each room type for each month (Note before you can do this calculation you
have first calculated the budgeted rooms revenue for each month as instructed above using the
Budgeted Room Revenue sheet)
 Calculate the variance %

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