SITXFIN003 MANAGE FINANCES WITHIN A BUDGET-Case Study-Part 1

ASSESSMENT METHOD 2 – CASE STUDY – PART 1

Instructions to students

1. This assessment requires you to manage and report on budgets

2. You must complete following tasks in this assessment

Task 1- Monitor budgets

Task 2 -Calculate variances
Task 3- Complete budget report

3. To be satisfactory in this assessment you must demonstrates all the skills satisfactory listed
in the marking guide

4. You must use a word processing software to complete Task 1 & Task 3 in & spreadsheet
software to complete task 2.

5. Your assessor will provide you the soft copies of required templates for this assessment

6. Recommended font sizes of the document should range between 10 and 14 and font type
should be as Calibri, Arial, Times New Roman or Tahoma

7. You could complete this assessment in classroom, Computer lab or self-paced.

8. You must spend approximately 2 hours to complete this assessment.

9. Ask your assessor, if you do not understand a question. Your assessor cannot tell you the
answer he/she may be able to re-word the question for you

10. On completion, you are required to submit all the parts to your assessor.

11. Your trainer/assessor will inform you the submission date

12. The additional and specific instructions are listed under each task

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Instructions to complete task 1 task 2 and task 3

1. Read the scenarios and complete reports.

2. Round all dollar values to the nearest whole number when calculating financial information;
for example, $12.55 becomes $13, $18.22 becomes $18.

3. 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%.
4. All budget calculations must be completed 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.

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Task 1: Monitor budgets

1. You must analyse the “Budget” given by the assessor and provide a report based on the
contents and outcomes of the Jackson Hotel operational budget – June quarter.

Budget Report
 Variable direct costs
Food purchases
Beverage purchases

 Variable indirect costs

List the hotel’s financial commitments under
their correct cost category. Name at least two Utility costs
commitments for each category Accounting Fees

 Fixed indirect costs

Commission credit card
Insurance

Name the top four cost categories the Food Purchases

business has allocated the most funds too in Beverages Purchases
this budget period.
Explain why have significant funds been
allocated to these categories?
Discuss their importance to the business and food and ambience and the sales and
consequences if inadequate funds are
allocated
Consider budget – April.
You are holding a team meeting to discuss
the financial targets provided in the
organisational and April bistro budgets.
Explain what information do you need to
communicate to the team to ensure they
understand the targets and goals to be
achieved
Wages & on Cost
Utilities
Funds that are being allocated to Food and
Beverages are directly related to the products
the restaurant is offering and are directly
related to the sales and profit generating
activity. Wages are indirectly related to the
core activity of the restaurant as the Chefs
and other staff are pivotal to the operation
and success of the restaurant. Utilities costs
are also the costs that are indirectly related to
the above said activity
Restaurants make profits by selling food to
the customers, that is the reason these cost
categories are allotted the significant so that
the customers are provided with best service
ultimately profits can be increased. If these
cost categories are not allotted the adequate
funds there is a risk that the restaurant will
lose the quality of it’s food and services and
that will ultimately reduce it’s customers,
sales and profits
Team needs to be communicated about what
sales target the business is trying to achieve
and what are the targeted costs that needs to
be achieved in order to make desired profits
for April. The company has targeted that the
cost of sales for food will be 39% of the sales
of food and cost of beverages will be 31% of
the sales of beverage. Likewise, information
about other expenses needs to be

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communicated so the teams understands

Explain what techniques can you use to
promote awareness of methods of controlling
costs or increasing sales so you can achieve
budget targets
what targets and goals are to be achieved in
order to keep the expenses under control and
make profit for the business.
Proper education and trainings can be used
to promote awareness to the staff about cost
controlling and increasing sales. Aliening the
goals of the staff with organizational goals will
help the staff realize that the success of the
business is their success. Reward scheme
can be introduced for the staff for making
efforts to maximize sales or reducing costs so
that they work towards a common goal.

Task 2: Calculate variances

1. You must analyse the “Budget” given by the assessor and provide a report based on the
contents and outcomes of the Jackson Hotel operational budget – June quarter

2. Complete the comparative analysis report for the Bistro departmental budget – April by
calculating all missing dollar value and percentage variances.

3. Complete the Favourable/Unfavourable column by indicating if the budget results are

favourable (F) or unfavourable (UF) for the business.

4. You must complete the above tasks using suitable spreadsheet software. Eg MS Excel.

Task 3: Complete Budget Report- April

1. Complete the below report based on the budget outcomes in the completed April budget
comparative report in Task 2 and case study information.

Document if there are any significant
variances in the sales figures that you should
be concerned about. If so explain what the
results indicate and why you are/are not
concerned about them
The variances in actuals sales results are
Favourable. Food Variance is positive by
14% and beverage sale variance is positive
by 8%. Increase in sales means increase in
profits and so sales variance in particular are
not concerning.

List any significant variances in any of the
expenses categories that you think should be
investigated further. If so, discuss which
categories and why you think they need
investigation. If no, discuss why the
deviations do not warrant investigation
Significant variances in expenses: - Food
Purchases - Beverage purchases - Wages
and on-costs - Printing & Stationery Food,
Beverage and wages costs showed
unfavourable variance by 9%, 9% and 15%
respectively. Although Food and beverages
costs increased lesser than the increase in
sales of the same category these are still
needs to be investigated as these are the

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main costs to the restaurants and the reason

for the increase should be investigated and
the measure should be taken to prevent
these costs from increasing in future. Wages
and on-cost showed an infabourable variance
of whopping 15% which is very for this
category as the wages costs are normally
fixed. The reason for this variance needs to
be investigated. Although Printing &
stationery and Training & seminars costs
showed unfavourable variance of 22% and
60% respectively, these represent a very
small portion of the expenses and the fact
that the winter menu promotion was
underway these deviations are not
concerning and do not warrant investigation.
Based on your responses to the above 2 The Sales Variance is Favourable by 11% as
contents, explain your overall evaluation of compared the unfavourable cost of sales
the budget results. Is the bistro meeting its variance of 9% which shows that the
financial targets business performed well. Wages and on-
costs unfavourable variance but the business
still showed profit for the month which means
that bistro is meeting its financial targets.

Which expense category has the most funds
allocated to it? Explain why it is important you
manage costs in this category carefully.
Using the results and information obtained
from the April comparative report, your
responses to the to the previous contents 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. 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?
 Which areas are underperforming or
performing better than expected?
 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.
 Organisational factors that contributed to
the setting of these targets.
Wages and on-costs is allocated with more
funds and it is very important to manage
costs in this category because it’s a very
sensitive category as staff and chefs are the
backbone of restaurant business. Allocating
low funds to this means that the restaurant
will not be able to hire competent staff and
allocating high funds can result in loss to the
business.
Currently the restaurant performed better
than the budget in most of the key areas of
the business. The budget for June Quarter is
very likely to be achieved if the business
performs as it performed this month. Sales
are stable and the restaurant just needs to
focus on expense control.
Sales are performing better than expected
along with few expenses but the Cost of
sales and few major expenses e.g Wages &
on-costs under performed.
Budgeted cost of sales and wages & on-costs
need to be allocated a bit more funds to
make possible for the staff to achieve the
targets.
Budget targets for May are achievable with a
slightly more allocation of funds to the cost of
sales. The prices are expected to rise and so
the cost should be adjusted of the increase in
prices.
Factors that contributed to the setting of

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these targets are:

i. The business performed well in
the sales area of the business.
ii. Apart from cost of sales and
Wages & oncosts the business
kept it’s expenses under control
and performed well in that area.

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To be completed by the assessor.

Marking Guide – case study Part 1

Student successfully demonstrate evidence of their Satisfactory If not satisfactory please comment
ability to do the following
Yes No

Monitor income and expenditure and evaluate

 
budgetary performance over budgetary life cycle.

Inform the changes to income and expenditure

 
priorities to team members before implementation

Allocate funds according to budget and agreed

 
priorities.

Use financial records to regularly check actual

 
income and expenditure against budgets.

Provide explanation report for consultation to

 
relevant personnel about resources decisions

Make awareness of the importance of

 
maintaining and controlling the budget

Problem solving skills to identify and report

 
deviations according to significance of deviation.

Include financial commitments in all

 
documentation to ensure accurate monitoring

Investigate appropriate options for more effective

 
management of deviations

Identify and report deviations as per the

 
significance of deviation

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Student successfully demonstrate evidence of their Satisfactory If not satisfactory please comment
ability to do the following
Yes No

Communicate with and advise colleagues of

 
budget status in relation to targets.

Assess existing costs and resources and

 
proactively identify areas for improvement.

Numeracy skills to interpret and use budget

 
figures in day-to-day work operations.

Interpret business and financial documents and

document clear recommendations based on  
budget information and reports.

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