SITXFIN003 – Manage finances within a budget
CASE STUDY C
This unit applies to tourism, travel, and hospitality and event businesses. While the case study scenario is
based on a hospitality business, the principles for managing a budget demonstrated in this assessment
are the same in all types of businesses.
Learner assessment guide and evidence
This assessment requires you to manage and report on budgets over a three-month period.
You are required to do the following.
Complete Tasks 1, 2 and 3
Read the scenarios and answer the questions.
You must answer all questions satisfactorily to achieve competency in the unit. The extent of
responses required will vary by question – an approximate word count is provided at each
question as a guide, where required.
Re-assessment: If you do not achieve the required standard, you will be given the opportunity to
be re-assessed by our Assessor. Arrangements will be made on an individual basis. If you are
deemed to be NS (Not Satisfactory), your assessor will either ask specific questions orally, and
record them with you using the supplementary evidence sheet or you will be asked to resubmit
your responses in full.
Round all dollar values to the nearest whole number when calculating financial information; for
example, $12.55 becomes $13, $18.22 becomes $18.
Unless stated otherwise, round all percentages to one decimal point when calculating financial
information; for example, 12.55% becomes $12.6%, 18.22% becomes 18.2%.
All budget calculations can be completed manually or using accounting software or computer-
based spreadsheet software, such as Microsoft Excel or Google Sheets.
Case study
The Jackson hotel has a bistro, two bars (public and sports), a drive-through and walk-in bottle shop and
TAB situated beside the sports bar.
You are the manager of JJ’s Bistro. It seats 210 people and is open for lunch and dinner, seven days a
week. The hotel promotes a family environment and has a playroom for younger children and an activity
centre for pre-teens containing electronic and other games. These glass walled areas are within view of
customers seated in the rear section of the bistro.
The hotel’s management team develop an operational budget for the business based on previous
budgets, anticipated business and any special projects, such as renovations or new products. Each
operational area within the hotel is given a departmental budget based on organisational goals and their
anticipated revenue and expenses.
Budgets are developed on a quarterly basis. Each department has quarterly and monthly budget targets.
Monthly budgets can be adjusted during a quarterly cycle if circumstances within the department change.
The following events have taken place during the April budget period.
Prices for meat, fruit and vegetables have increased as a result of recent drought in some regions
and floods or storms in others.
Prices for many wines have fallen due to a surplus in the market.
Beer prices have risen slightly, again due to the drought leading to shortages of ingredients and
an increase in government taxes.
A major wine supplier has been running an in-house promotional campaign, with staff product
knowledge training provided to help increase sales.
The bistro menu changes to the new winter menu on May 1 st. Its introduction is being promoted in
April throughout the hotel.
Task 1: Monitor budgets
Read the Budget
Jackson Hotel operational budget – June quarter
April May June June quarter
$ $ $ $
Revenue
Food sales 116,800 127,750 120,450 365,000
Beverage sales 240,000 247,500 262,500 750,000
Tab commission 49,300 47,850 47,850 145,000
Total revenue 406,100 423,100 430,800 1,260,000
Cost of sales
Food purchases 48,180 49,640 48,180 146,000
Beverage purchases 84,000 86,625 91,875 262,500
Total cost of sales 132,180 136,265 140,055 408,500
Gross profit 273,920 286,835 290,745 851,500
Expenses
Accounting 2,700 3,000 4,300 10,000
Advertising/promotions 3,900 4,810 4,290 13,000
Bank charges 7,582 7,359 7,359 22,300
Cleaning contractor 7,451 7,451 7,451 22,354
Commission credit card 767 767 767 2,300
Small equipment replacement 833 833 833 2,500
Insurance 1,833 1,833 1,833 5,500
Laundry 347 357 347 1,050
Legal fees 1,280 360 360 2,000
Licence fees & permits 983 983 983 2,950
Motor vehicle expenses 500 500 500 1,500
Maintenance 4,224 4,352 4,224 12,800
Printing & stationery 800 800 800 2,400
Rubbish removal 500 500 500 1,500
Communication 2,000 2,000 2,000 6,000
Training & development 1,190 1,155 1,155 3,500
Wages &on-costs 193,050 198,900 193,050 585,000
Utilities 12,000 11,647 11,647 35,295
Total expenses 241,941 247,608 242,400 731,449
NET PROFIT 31,979 39,227 48,345 120,051
Answer all questions based on the contents and outcomes of the Jackson Hotel operational
budget – June quarter.
Q1: List the hotel’s financial commitments under their correct cost category. Name at least two
commitments for each category
Variable direct costs
Laundry;
Maintenance;
Variable indirect costs
Wages;
Utilities;
Fixed indirect costs
Rent;
Salaries;
Q2: Name the top four cost categories the business has allocated the most funds too in this budget
period.
1. Wages & on-costs;
2. Beverage purchases;
3. Food purchases;
4. Utilities;
Q3: Why have significant funds been allocated to these categories?
Discuss their importance to the business and consequences if inadequate funds are
allocated.
Q4: Using the Bistro departmental budget – April.
You are holding a team meeting to discuss the financial targets provided in the organisational and
April bistro budgets.
Cost control is exercised through setting standards or norms or targets and comparing actual
performance therewith with a view to ascertaining deviations from set targets or norms or
standards and taking corrective action to ensure that future performance conforms to the set
standards or norms or targets.
Q5: What techniques can you use to promote awareness of methods of controlling costs or increasing
sales so you can achieve budget targets?
The technique of cost control involves the determination of standards in respect of each item of
cost, ascertainment of actual costs regarding those very items, detection of variations of actuals
from the standards laid down, analysis of these variances so as to determine the responsibility
and the cause and cost of each variance, and then taking necessary action to ensure that actual
costs conform to standard costs in future.
Task 2: Calculate variances
Complete the comparative analysis report for the Bistro departmental budget – April by
calculating all missing dollar value and percentage variances.
Complete the Favourable/Unfavourable column by indicating if the budget results are favourable
(F) or unfavourable (UF) for the business.
Task 2: Calculate variances
Comparative analysis report
Bistro departmental budget – April
Don’t forget to round your figures up or down to the nearest whole number.
April Favourable / May June quarter
Budget Actual Variance Variance Unfavourable Budget Budget
$ $ $ % $ $
Revenue
Food sales 105,120 119,837 14,716.80 14.0% Favourable 114,975 328,500
Beverage sales 89,250 96,390 7,140.00 8.00% Favourable 91,875 262,500
Total sales 194,370 216,226 21,857 11.24% Favourable 206,850 591,000
Cost of sales
Food purchases 40,953 45,048 4095 10.00% Unfavourable 42,194 124,100
Beverage purchases 27,563 30,043 2,481 9.0% Unfavourable 26,775 78,750
Total cost of sales 68,516 75,091 6,576 9.60% Unfavourable 68,969 202,850
Gross profit 125,855 141,135 15280 12.1% favourable 137,881 388,150
Expenses
Advertising/Promotions 780 624 156 20.0% Favourable 962 2,600
Cleaning contractor 1,490 1,490 0- 0.0% Unfavourable 1,490 4,471
Small equipment replacement 333 393 (60) 18.02% Unfavourable 333 1,000
Laundry 245 232 13 5.5% Favourable 245.00 735
Maintenance 1,493 1,262 231 15.5% Favourable 1,493.33 4,480
Printing & stationery 160 195 (35) (22.0%) Unfavourable 160.00 480
Training & seminars 408 653 (245) (60.0%) Unfavourable 396 1,200
Wages & on-costs 85,901 98,771 (12,870) 87.0% Unfavourable 89,345 260,763
Utilities 3,441 3,235 206 6.0% Favourable 3,494 10,589
Total expenses 94,251 106,855 12604 13.4% Unfavourable 97,919 285,857
NET PROFIT 31,604 34,281 2677 10.00 Unfavourable 40,115 102,293
Task 3: Question and answer
Answer all questions based on the budget outcomes in the completed April budget comparative
report in Task 2 and case study information.
Q1: Are there any significant variances in the sales figures that you should be concerned about?
Explain what the results indicate and why you are/are not concerned about them.
68,516 75,091 6,576 9.60%
FIGURES OF cost of SALE VARIANCE
This not favourable as par projected sales.
Q2: Are there significant variances in any of the expenses categories that you think should be
investigated further? If yes, discuss which categories and why you think they need investigation. If
no, discuss why the deviations do not warrant investigation.
Food sales 105,120 119,837 14,716.80 14.0%positive
Sale is most important part of business in the table food sales is up by 14% which is favourable for
business
Q3: Based on your responses to questions 1 and 2, what is your overall evaluation of the budget
results? Is the bistro meeting its financial targets?
Over all financial figures of satisfactory and business is in profitable condition.no the bistro meeting
is not about targets.
Q4: Which expense category has the most funds allocated to it? Explain why it is important you
manage costs in this category carefully.
Maintenance 1,493
Maintenance is hue funding it’s very important
Q5: Using the results and information obtained from the April comparative report, your answers to the
previous questions and the background information.
Write a transcript of the outcomes of your report ready to deliver to the bistro staff at the next team
meeting. When you’re preparing for a study experience abroad, whether as an exchange student
for a semester or two, or for completing a full Bachelor’s or Master’s degree, you need to go
through an extensive ‘paperwork’ process. The transcript of records is one of those important
documents you’ll have to take care of and make sure the information is properly filled in.
When requesting a transcript, you must provide the following information: name, student number (if
known), date of birth, permanent address, program of study, year of graduation, number of
transcripts requested and institution you would like the transcript sent to.
The transcript should include the following information.
The current status of the budget; is the work area meeting its budget targets, is it on track to
meet June quarter budget targets?
Yes the June quarter is meeting its budget.
Which areas are underperforming or performing better than expected?
Food sales area is performing better than the best and hence profitable
But the total cost of sale is higher than expectations
What changes, if any, need to be made to help the team meet next month’s budget targets? An
outline of budget targets for May.
With this process, budget forecasting is done quarterly, rather than for the whole year. Rolling
forecasts allow you to better align and adapt your budgets while also improving the accuracy of
your future projections.
Organisational factors that contributed to the setting of these targets.
1. Set Specific Goals. Your goal must be clear and well defined.
2. Set Measurable Goals. Include precise amounts, dates, and so on in your goals so you can
measure your degree of success.
3. Set Attainable Goals. Make sure that it's possible to achieve the goals you set.
4. Set Relevant Goals.
5. Set Time-Bound Goals.
