SITXFIN004 Prepare and Monitor BudgetsNOTE1

SITXFIN004 Prepare and Monitor Budgets
Learner Assessment
Pack
V2.0_August2019
Evidence recorded Evidence Type/ Method of assessment Evidence Submitted
Unit Assessment Part 1 Unit Knowledge Assessment (UKA) Yes / No
Unit Assessment Part 2 Unit Skills Assessment (USA) Yes / No

CONTENTS
UNIT OVERVIEW .........................................................................................................................................................

3
Unit Description .........................................................................................................................................................
3
ASSESSMENT EVIDENCE ..............................................................................................................................................
4
PERFORMANCE EVIDENCE .....................................................................................................................................................
4
KNOWLEDGE EVIDENCE ........................................................................................................................................................
4
ASSESSMENT CONDITIONS .................................................................................................................................................... 5
AQF SPECIFICATIONS FOR ASSESSMENTS .................................................................................................................................
5
Knowledge ..................................................................................................................................................................
6
Skills ...........................................................................................................................................................................
6
Application .................................................................................................................................................................
6
ACSF SPECIFICATIONS AND FOUNDATION SKILLS ....................................................................................................................... 6
SUBMITTING ASSESSMENTS ...................................................................................................................................................
6
TRAINING RESOURCES ...........................................................................................................................................................
6
UNIT ASSESSMENT PLAN ............................................................................................................................................
7
UNIT ASSESSMENT PART 1 ..........................................................................................................................................
8
UNIT KNOWLEDGE ASSESSMENT (UKA) ......................................................................................................................
8
STUDENT TO COMPLETE AND SUBMIT ........................................................................................................................
8
STUDENT INSTRUCTIONS: ......................................................................................................................................................
9
UNIT ASSESSMENT PART
2 .........................................................................................................................................16
UNIT SKILLS ASSESSMENT
(USA) ................................................................................................................................16
STUDENT TO COMPLETE AND
SUBMIT .......................................................................................................................16
STUDENT INSTRUCTIONS: ....................................................................................................................................................
17
1. CASE STUDY BASED PROJECT REPORT WITH ROLE PLAY TASK ........................................................................................ 18
REQUIRED RESOURCES: .......................................................................................................................................................
18
APPENDICES ..............................................................................................................................................................2
7
APPENDIX: 01 ...............................................................................................................................................................
28
Apex Institute of Education SITXFIN004 –Learner Assessment Pack V2.0_August 2019 | CRICOS: 03156M
Page 2 of 34
Case study – Nara Business Hotel ............................................................................................................................
28
APPENDIX: 01 ...............................................................................................................................................................
30
Annual Year-end financial performance review form .............................................................................................. 30
APPENDIX: 03 ...............................................................................................................................................................
31
Internal Memo Template ......................................................................................................................................... 31
UNIT OVERVIEW
SITXFIN004 Prepare and Monitor Budgets
UNIT DESCRIPTION
This unit describes the performance outcomes, skills and knowledge required to analyse financial and other
business information to prepare and monitor budgets. It requires the ability to draft and negotiate budgets,
identify deviations, and manage the delivery of successful budgetary performance.
The unit applies to all tourism, travel, hospitality and event sectors. The budget may be for an entire
organisation, for a department or for a particular project or activity.
It applies to senior personnel who operate independently or with limited guidance from others and who are
responsible for making a range of financial management decisions.
No occupational licensing, certification or specific legislative requirements apply to this unit at the time of
publication.
ELEMENT PERFORMANCE CRITERIA

Elements describe Performance criteria describe the performance needed to demonstrate
the essential achievement of the element
outcomes.
1. Prepare budget 1.1.Determine and confirm scope and nature of required budgets.
information. 1.2.Identify, access and interpret data and data sources required for budget
preparation.
1.3.Analyse internal and external factors for potential impact on budget.
1.4.Provide opportunities for colleagues to contribute to budget planning process.
2. Prepare budget. 2.1.Draft budget based on analysis of all available information.
2.2.Estimate income and expenditure and support with valid, reliable and relevant
information.
2.3.Reflect organisational objectives within draft budget.
2.4.Assess and present options and recommendations in a clear format.
2.5.Circulate draft budget to colleagues and managers for input.
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3. Finalise budget. 3.1.Negotiate budget according to organisational policy and procedures.
3.2.Agree on and incorporate modifications.
3.3.Complete final budget in a clear format within designated timelines.
3.4.Inform colleagues of final budget decisions and application within relevant work
area, including reporting and financial management responsibilities.
4. Monitor and 4.1.Regularly review budget to assess actual performance against estimated
review budget. performance and prepare accurate financial reports.
4.2.Incorporate all financial commitments into budget and budget reports.
4.3.Investigate and take appropriate action on significant deviations.
4.4.Analyse changes in internal and external environment and make necessary
adjustments.
4.5.Collect and record relevant information to assist in future budget preparation.
ASSESSMENT EVIDENCE
To achieve competency in this unit a student must demonstrate their ability to complete tasks outlined in
elements and performance criteria of this unit in the context of the job role, and:
PERFORMANCE EVIDENCE
Evidence of the ability to complete tasks outlined in elements and performance criteria of this unit in the
context of the job role, and:
▪ prepare a budget for a business that meets the specific business’ needs ▪ demonstrate the
following when preparing the above budget:
▪ consultation on components
▪ analysis of factors that impact on the budget
▪ completion of draft and final versions of budget within designated timelines ▪ monitor
and review the above budget against performance over its life cycle.
KNOWLEDGE EVIDENCE
Demonstrated knowledge required to complete the tasks outlined in elements and performance criteria of
this unit:
▪ types of budgets:
▪ cash budgets
▪ cash flow budgets
▪ departmental budgets
▪ event budgets
▪ project budgets
▪ purchasing budgets
▪ sales budgets
▪ wage budgets
▪ whole of organisation budgets
▪ budget terminology
▪ specific industry sector and organisation:
▪ role and nature of budgets
▪ budget formats, budget performance and financial reports
▪ financial reporting procedures and cycles
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▪ features and functions of accounting software programs used to prepare and monitor budgets ▪
internal and external factors that impact on budget development:
▪ growth or decline in economic conditions
▪ human resource requirements
▪ new legislation or regulation
▪ organisational and management restructures
▪ organisational objectives
▪ scope of the project
▪ shift in market trends
▪ significant price movement for certain commodities or items
▪ supplier availability and cost
▪ budget preparation and monitoring practices and techniques:
▪ sources and contents of data required for budget preparation:
▪ competitor research
▪ customer or supplier research
▪ declared commitments in areas of operation
▪ financial information from suppliers
▪ financial proposals from key stakeholders
▪ income and expenditure for previous time periods
▪ departmental, event or project budgets
▪ grant funding guidelines or limitations
▪ management policies and procedures
▪ organisational budget preparation guidelines
▪ performance information from previous periods
▪ techniques for making budget estimates
▪ common reasons for deviations and budget deviation management.
ASSESSMENT CONDITION S
Skills must be demonstrated in an operational tourism, travel, hospitality or events business operation or
activity for which budgets are prepared. This can be:
▪ an industry workplace
▪ a simulated industry environment.
Assessment must ensure access to:
▪ computers, printers and accounting software packages
▪ financial and operational data and reports used to prepare budgets
▪ others with whom the individual can discuss, and negotiate draft and final budget components;
these can be:
▪ those in an industry workplace who are assisted by the individual during the assessment
process; or
▪ individuals who participate in role plays or simulated activities, set up for the purpose of
assessment, in a simulated industry environment operated within a training organisation.
Assessors must satisfy the Standards for Registered Training Organisations’ requirements for assessors.
AQF SPECIFICATIONS FOR ASSESSMENTS
AQF Specifications for Assessments in Advanced Diploma Qualifications:

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This assessment is set in accordance with the criteria for AQF Level 5. As stated in the AQF specification for
the Advanced Diploma qualifications must be designed and accredited to enable graduates to demonstrate
the learning outcomes expressed as knowledge, skills and the application of knowledge and skills specified
in the level 5 criteria and the Advanced Diploma descriptor.
Students at this level will have specialised knowledge and skills for skilled/paraprofessional work and/or
further learning.
KNOWLEDGE
Students at this level will have broad theoretical and technical knowledge of a specific area or a broad field
of work and learning.
SKILLS
Students at this level will have a broad range of cognitive, technical and communication skills to select and
apply methods and technologies to:
• analyse information to complete a range of activities
• interpret and transmit solutions to unpredictable and sometimes complex problems
• transmit information and skills to others
APPLICATION
Students at this level will apply knowledge and skills to demonstrate autonomy, judgement and defined
responsibility in contexts that are subject to change and within broad parameters to provide specialist
advice and functions.
ACSF SPECIFICATIONS AND FOUNDATION SKILLS
The term ‘Foundation Skills’ is currently used to include the core skills defined in the Australian Core Skills
Framework (ACSF) as well as the employability skills identified by employers as critical for effective
performance in the workplace.
Foundation skills encompass both the core skills of reading, writing, oral communication, numeracy and
learning as described by the Australian Core Skills Framework (ACSF), and the Employability Skills/Core Skills
for Work. They exist on a continuum from very basic skills to highly-developed and specialist skills. The
foundation skills for this unit are located in the Unit Outline Booklet and have been addressed in the
assessment as part of the performance criteria for this unit.
SUBMITTING ASSESSMENTS
Students should submit assessment tasks with the provided cover sheet.
Assessments should be submitted on or before their due date. Extensions for individual assessment tasks
may be negotiated in specific circumstances. Consultation on this must occur prior to the due date and
extensions due to illness will require a medical certificate. Extensions must be confirmed by the Academic
Manager in writing.
TRAINING RESOURCES
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The student will have access to the following:
• AIE Student Workbook
• PowerPoint presentation
• Learner Assessment Pack (LAP)
• Access to a computer, the Internet and word-processing system such as MS Word and MS Excel
UNIT ASSESSMENT PLAN
To demonstrate competence in this unit, you must be assessed as satisfactory in each of the following
assessment part.
Evidence recorded Evidence Type/ Method of assessment Evidence Submitted
Unit Assessment Part 1 Unit Knowledge Assessment (UKA) Yes / No
Unit Assessment Part 2 Unit Skills Assessment (USA) Yes / No
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UNIT ASSESSMENT PART 1
UNIT KNOWLEDGE ASSESSMENT (UKA)
STUDENT TO COMPLETE AND SUBMIT
STUDENT INSTRUCTIONS:
You are required to demonstrate the knowledge you have gained from undertaking SITXFIN004 Prepare and
Monitor Budgets unit of competency.
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• All questions must be answered correctly to be completed satisfactorily.
• All knowledge assessments are untimed and are conducted as open book (this means student can
refer to textbooks or any resources).
• Student may handwrite/use computers to answer the questions.
• This assessment task may be completed in a classroom, at home, learning management system (i.e.
Moodle), or independent learning environment.
• You must complete all questions unassisted by the assessor or other personnel but may refer to
reference material as needed.
Submission details
• The Assessment Task is due on the date specified by your trainer. Any variations to this arrangement
must be approved in writing by your trainer.
• Fill out and attach the Assessment Submission form to the documents you are submitting to be
marked.
• Please answer each question on a separate page provided and clearly indicate the question number
at the top of the page.
• The Trainer/Assessor may further prompt and question in order to receive answers of appropriate
quality or if further clarification is required and to validate authenticity of your submitted work.
Answer all of the following questions.
1. Name 4 business considerations you might consider when researching a budget. (25-50 words)
Response
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1. Actual sale order
2. Projected sale order
3.Market Research
4.Economic condition
2. Describe how the following sources of data can be used for budget preparation. (75-100 words)
Response
Competitor research – A research method that helps identify business opportunities and identify the
threats your business faces.
Customer or supplier research – Identifies each type of customer requirement and satisfies the customer.
Declared commitments in areas of operation – when preparing the budget, we prohibit other tasks that
the department can perform.
Financial information from suppliers – A useful way to choose the best supplier.
Financial proposals from key stakeholders – You should consult with your manager to ensure that your
prepared budget reflects your company's needs.
Performance data/information from previous time periods – Historical data is an important part of
budget research because it represents business performance.
Departmental, event or project budgets – when preparing a budget, you need to consider certain
budgets, etc.
Grant funding guidelines or limitations – Grant funds should be considered when preparing a budget.
Management policies and procedures – You should consult with appropriate managers to implement
procedures and policies for budget preparation.
Organizational budget preparation guidelines – Employees must adhere to the guidelines that specify
how to prepare the budget
3. Explain how the following internal factors can impact on budgets. (50-75 words)
Response
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Management restructuring – Management teams can impact budgets as they operate in different ways
and priorities change spending.
Human resource requirements- Since a new employee of the company is required, this includes wages
and other expenses such as pensions and workers' compensation.
New Projects and Business Objectives – Affect budgets because you need to shift funds based on project
scope.
Changes in commodity or service prices – changes in suppliers, etc. affect the budget, which can affect
the company's return.
4. Explain how the following external factors can impact on budgets. (25-50 words)
Response
Legislation and regulations – Companies can adjust their budgets because they affect business
operations and finances.
Changes in the global economy – As the economy shrinks, it has a big impact on business profits. So
adjust your budget.
Market Trends – Market trends can affect the number of customers. This raises static considerations in
the TH & E business, allowing the company to adjust its budget.
5. How does involving staff “from the bottom up” in the budgeting process, help the business? (20-30
words)
Response
Start with a plan or schedule and then pay the total budget.
The bottom-up approach involves all employees involved in budget preparation and reflects their
opinions.
6. What does the process of preparing a draft budget usually involve? (20-30 words)
Response
It takes time to review strategic plans, determine annual targets, identify project and operating costs,
gross revenue benefits, and readjust numbers.
7. How does breaking the budget down into groups, departments, or income and expense categories help
colleagues? (20-30 words)
Response
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1. It's easier to analyze budget information.
2. Retrieve budget information and save time.
3. Set goals to help employees achieve their budget and company goals.
8. Name 3 people (job roles) you would circulate the draft budget to for feedback or approval: (15-20
words)
Response
1.Front-line managers
2.Financial Controllers
3.The owners.
9. The budgeting process requires strong negotiation skills. Why is it important to convince staff of the
achievability of the budget? (20-30 words)
Response
Negotiations will help finalize the responsibilities of each department and the resources available for the
implementation of the budget plan.
Therefore, the budgeting process requires negotiation skills.
It is important to convince employees of the feasibility of the budget.
Negotiation is the process of reaching a mutual agreement, which proceeds until it agrees at some point
with employees and executives.
10. A staff member suggests a change or alteration to the budget. List 3 aspects you need to consider
ensuring any changes would have no negative impacts: (20-30 words)
Response
1. Whether the additional costs are justified.
2. The effect of the costs on the bottom line.
3. Potential service provision issues.
11. In most businesses/industries, when must the budget be complete? (15-20 words)
Response
The end the financial year.
12. What information should department managers include in their monthly reports? (20-30 words)
Response
Small businesses include only profit and loss reports, balance sheets and cash flow statements.
Large businesses include departmental reports, sales reports, and many other reports .
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13. How often should the budget be compared to the actual accounting results? (15-20 words)
Response
• Usually monthly.
14. Name and describe 5 financial reports you might generate from your accounting system to check your
budget against actual income or expenditure. (20-30 words)
Response
1.Profit and Loss Statement – Whether the entity generated losses and profits
2.Balance Sheet – Display Assets and Liabilities
3.Cash flow Report- Flow of Bank Account Transfers to Businesses
4.Departmental Reports – Displaying Income and Expenditure Budget by Department
5.Sales Report –Shows the difference between actual revenue and budget in each monetization
department within your business.
15. Every revenue and expense item on the Profit and Loss Statement should be compared to what? (15-
20 words)
Response
Must be compared with the company's actual budget figures
16. When revenue variances occur, why is talking to staff a good way to help identify and find options to
address the issue? (15-20 words)
Response
Employees are familiar with certain decisions made by management to achieve realistic goals / budgets.
Therefore, gathering information from employees is the best way to bridge the gap between
improvements.
17. List 3 factors that can cause variances in staff budgets. (20-30 words)
Response
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1.Using too much casual labor
2.Staff on unplanned leave, sick leave etc.
3.Skills of the manager in rostering
18. Why is monitoring your budget progressively throughout the year so important? (15-20 words)
Response
If you can't quickly identify the problem early, you can't adjust your compensation strategy, because it
helps you see the difference in time.
19. How can you collect information to help create future budget plans? (20-30 words)
Response
It is important to have procedures and systems in place for your organization to use when it needs to
store sensitive information, data records, and so on.
20. Name an accounting program you can use to help manage budgets. (15-20 words)
Response
1. Scoro
2. Centage
3. Prophix
4. Maxiplan
5. Tagetik
6. Coupa
7. Tidemark
8. Neubrain
9.MYOB
10.Xero
21. Explain each of the following types of budgets: (50-75 words)
Response
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Cash budget/Cashflow budget – The cash flow statement displays the actual cash flow.
Departmental budget – The budget for each department in your business. Include only spending budget.
Event budget – This budget is used for a single event.
Project budget – Analyse the costs and benefits of new projects and make sure management is worth it.
Purchasing budget – Shows estimated purchase units and business spend.
Sales budget – The first budget includes all sales generated from sales, service fees, investment income,
grants, and donations.
Wage budget – Appears in each department's budget and shows the total wage for the business.
Master budget – Overall Business Budget.
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UNIT ASSESSMENT PART 2
UNIT SKILLS ASSESSMENT (USA)
STUDENT TO COMPLETE AND SUBMIT
STUDENT INSTRUCTIONS:
The project is designed to assess the skills required to strategically manage the marketing process and
marketing personnel within an organization (simulated business called ‘Nara Business Hotel).
• If you are not sure about any aspect of the assessment or would like to discuss your particular
needs, please speak to your trainer.
• Your trainer will tell you the date you need to submit your assignment.
• You need to complete all parts and submit them together by the due date.
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• This project assignment is to be completed using the “Nara Business Hotel” case study. It is
included in the “Appendix”.
• The checklist table will identify the records that you are required to prepare and submit (as a single
submission).
• Your assignment must be typed (in 12 point type on A4 paper) and you need to complete an
Assessment Cover Page.
• Make sure you keep a copy of your assignment before you hand it in to your trainer
Note :
Any Role Play or Presentation needs to be completed in the class with your Trainer / Assessor on the date
specified by your trainer.
1. CASE STUDY BASED PROJECT REPORT WITH ROLE PLAY TASK
This project assignment is to be completed using the “Nara Business Hotel” case study. It is included in the
“Appendix”. This assessment requires students to analyse financial and other business information to
prepare and monitor budget. It requires the ability to draft and negotiate budgets, identify deviations, and
manage the delivery of successful budgetary performance. The assessment has four parts and the details
are provided below:
Part 1: In Part 1, students are required to prepare budget information by determining the scope and nature
of the required budgets, identifying and interpreting data, analysing internal and external factors and
working with colleagues to budget the planning process.
Part 2: In Part 2, students are required to prepare a draft budget by analysing the information gathered in
Part 1, estimating income and expenditure, reflecting organisational objectives within the budget and
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circulating the draft budget to managers for input. To do this part students will need to access the NBH 2019
& 2020 Budget Template Excel Files provided.
Part 3: In Part 3, students are required to finalise the budget by negotiating the budget according to
organisational policy and procedures, making modifications, completing the final budget in the required
format and informing your colleagues.
Part 4: In Part 4, students are required to monitor and review the budget by assessing actual performance
against estimated performance, incorporating financial commitments, taking actions on deviations and
collecting relevant information to assist in future budget preparations.
REQUIRED RESOURCES:
▪ The “Nara Business Hotel” case study.

▪ NBH Budget 2018 – Excel File
▪ NBH 2019 & 2020 Budget Template – Excel Files
▪ Appendix 1 – 3
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Part 1.
You are working as a member of the financial management team at the Nara Business Hotel. Your
manager sends you an email requiring you to prepare information for the 2019/2020 NBH budget
which facilitates the organisations growth objectives.
From: nbhfinancemanager@nbh.com.au
To: nbhfinancestudent@nbh.com.au
Dear Colleague,
As you may know over the past 5 years there has been a lot of demand for our hotel rooms.
However, due to our few room numbers many residents have failed to get a booking and have
been left upset as a result. The shareholders of NBH recognise this as an opportunity and wish to
achieve a 50% growth in profits over the next 2 years.
In order to achieve these growth objectives the AHMG has decided to expand the hotel by
introducing 50 new rooms. They believe that due to the high demand for rooms the full cost of
the expansion will be recovered within a year, making the expansion a viable business
opportunity.
We would like to prepare a budget for 2019 & 2020 to prepare for this expansion. Could you
please prepare a short brief defining the nature and scope of the budget, a list of the budgeted
expense which will need to be amended and an analysis of the internal and external factors
which may impact the budget.
I have attached a copy of the 2018 budget which you can use in your preparation. Thanks for
your help.
Kind regards,
Barry Barrington
Respond to your managers email by completing the tasks below
 Task 1
a) Create a short brief of 100 words, defining the nature and scope of the budget. In your brief,
consider the purpose of the budget and the impact it will have upon the various
departments of the hotel.
Note: the main departments within the hotel are Operations (hospitality), Marketing, Finance
(accounts), Human Resources
Part 1
Task 1
a)
From: nbhfinanceskj@nbh.com.au
To: nbhfinancejenney@nbh.com.au
Dear Micheal
Hello
Thank you for your email, I have checked the file you sent.
In order to draft a budget for a hotel next year, it is expected that a lot of floating costs will be
incurred next year.
Adding 50 rooms to expand the hotel incurs high rental costs.
And you need to select a new employee. High maintenance costs will also be incurred.
To expand the hotel, you need to reduce unnecessary costs and quickly budget.
Therefore I want your opinion.
Thank you.
Sincerely,
Pattaniya Kosayothin
31
Apex Institute of Education | BSBMKG603 – Learner Assessment Guide V2.0 April 2019 | CRICOS: 03156M Page 19 of
b) Based off the 2018 budget, determine which of the budgeted expenses will need to change
in order to reflect the growth objectives of the organisation.
Once determined form a list and discuss this list with your colleagues (classmates)
• Ask at least two of your classmates for feedback and contribution
• Take note of the feedback and contribution received from your colleagues
• You must also contribute to your colleagues planning processes
After completing this task, finalise your list to be included in your email response to your
manager.
As businesses continue to grow, change and improve, budgets must constantly change and
change. Therefore, we must consider the various internal and external impacts that will
create our business budget.
In particular, we will spend a lot of variable costs from 2018 to 2019.
The following is a discussion of the 2019 and 2020 drafts of the fluctuating and fixed costs of
James and Alvin.
As you can see in the Excel file, there was an opinion to pay a reasonable variable cost.
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c) Analyse internal and external factors that may impact the budget. In your response
consider the risks that may impact the organisation and justify your factors with reasoning.
Your analysis should be summarised into 75-100 words.
Note: a PESTLE analysis can assist you in determining external factors

Internal factors
Human Resource Requirements – New employees are required, which adds cost to the budget.
Service Price Changes – New projects affect the company's budget.
External factors
Laws and Regulations – Allow businesses to adjust their budgets as they affect business operations.
Market Trends – Market trends can affect customers who visit your facility. This allows for financial
considerations and budget adjustments for the TH & E business.
d) Compose a brief email (50-75words) to your manager, summarizing your findings in Part 1
Task 1.
To: manager.financedepartment@nbh.com.au
From: [enter your email address]
---------------------------------------------------------------------------------------------------- Dear
[Insert recipient name],
[Opening greeting]
[Email text – nature scope of budget]

[Email text – changing expenses]
[Email text – external impacts on budget]
[Final greeting]
Kind regards, [Insert sender name]
To: manager.financedepartment@nbh.com.au
Dear. Stanley
Hello
We had a meeting about the budget.
In order to create a draft budget, a company needs a lot of budget changes. In particular, 50 rooms
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have been expanded to manage a total of 150 guests.
Many budgets are required, including labor, operating and maintenance costs.
Therefore, as a result of the meeting, the meeting controls variable costs.

Micheal suggested meeting with a Room Furnishing supplier.
Jack mentioned that building maintenance costs should be kept to a minimum.
I ask you for feedback on what we discussed next year's budget.
Thank you.
Sincerely,
PART 1: Your assessor will be looking for:
Before you hand in the Part 1 assessment tasks, use the checklist below to make sure you have completed
all the activities and have included all relevant information.
• Determined and confirmed scope and nature of required budgets
• Identified, accessed and interpreted data and data sources required for budget preparation
• Analysed internal and external factors for potential impact on budget
• Provided opportunities for colleagues to contribute to budget planning process
Part 2.
Your manager writes back to you and informs you that in order to accommodate the expansion,
the increased costs will need to be reflected in the variable expenses, a new neighbouring property
will need to be acquired and the income will need to be adjusted based on the forecasts provided
in the case study.
From: nbhfinancemanager@nbh.com.au
To: nbhfinancestudent@nbh.com.au
Dear Colleague,
Thanks for the information you have previously provided.
I would know like you to please complete the draft 2019 and 2020 budget to reflect the changes
which you have listed earlier. You will need to present the draft budget to your colleagues,
managers and the NBH shareholders.
The shareholders understand that due to the expansion in 2019 they will not be able to receive
their $2,000,000 fixed return. However, as they wish to have an increase in profitability in 2020,
they would like to ensure a $3,000,000 fixed return in 2020 and the consecutive years.
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It is worth noting that we will also be renting the neighboring property which has 50 rooms which
need to be furnished and we will be using that in addition to our current hotel premises. I have
attached a forecasted revenue plan for the next 2 years which you can use in the preparation of
your budget.
Kind regards,
Barry Barrington
Complete the tasks below to Prepare a budget for 2019 and 2020 based on the information
provided
 Task 1
a) Based on the expansion objectives and the information provided prepare the 2019 and 2020
budget.
Step 1:
Based on the NBH Budget 2018, complete the NBH 2019 and 2020 budget using the provided
excel file templates :
• Carry forward any excess cash from the previous year budget, subtracting the investor
returns as per the policy.
Note: if there is a loss, carry forward the complete amount of the loss, without giving any
investor returns. In excel to input a loss, put a bracket around the number. Excel will colour
the number red to confirm it is negative
• Use the forecasted revenue to adjust the income.
Step 2:
Using the information you collected in Part 1, adjust the variable expenses to account for the
addition of 50 new rooms in both the 2019 and 2020 budget.
Note: refer to the NBH policies and procedures to gain an understanding of certain expenses.
For example, the furnishing costs will need to be readjusted in 2019 and 2020.
Step 3:
Adjust the fixed expenses within the 2019 and 2020 budget.
Note: the fixed expenses do not vary by the number of rooms within the hotel. Refer to the
NBH policies and procedures to determine which of the fixed expenses will reflect the
acquisition of 50 new rooms.
Note: Save your NBH Budget 2019 Excel File from Part 2. Save and title the copy as “(your
namestudent ID) NBH Budget 2019 Part 2”. You must submit each Part’s excel file separately.
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You can attached file separately (Part2 - NBH Budget 2019,2020 )
b) Within the budget, determine the total income, the total costs and the availability of cash
for the proposed expansion in the 2019 and 2020 budget. Analyze whether the expansion is
feasible based on a comparison between the income and costs for each budget year. Write a 50
word summary of your findings which will be provided to your manager alongside the budget.
The biggest cost change list is 50 room rentals.
Estimated earnings for 2019 are $ 187.250 loss.
However, by 2020, an increase in income is expected to lead to a fixed income of $ 3,132,500. As

the number of customers increases, the profit increases for the room, which will turn into a
surplus.
c) Prepare a formal email which is to be circulated to your managers and colleagues within
the finance department. Your email will clearly present the 2019 and 2020 draft budget
(attached file to email) and your summary from Part 2 Task 1 (b). Additionally, within your email
ask and encourage your managers and colleagues for their input in regards to the draft budgets.
Your email should be (75-125 words) in length and be structured using the following template.
To: financedepartment@nbh.com.au
From: [enter your email address]
---------------------------------------------------------------------------------------------------- Dear
[Insert recipient name],
[Opening greeting]
[Email text – draft budget attached 2019/2020]

[Email text – budget summary]
[Email text – ask for input]
[Final greeting]
Kind regards,
[Insert sender name]
To: manager.financedepartment@nbh.com.au / nbhfinanjenney@nbh.com.au / nbhfinanjack@nbh.com.au
Page 24 of 34
Dear. Stanley / Colleague,
Hello
We made draft budgets for 2019 and 2020. Based on 2018 budget.
In 2019, many cost fluctuations are expected due to investment in hotels.
However, deficits are expected in 2019 and will be surplus by 2020.
A fixed income of $ 3,132,500 is expected in 2020.
Attach a draft file for your budget.
Check the file.
Thank you.
Sincerely,
all the tasks and have included all relevant information.
• Drafted a budget based on analysis of all available information

• Estimated income and expenditure and support with valid, reliable and relevant information
• Reflect organisational objectives within the draft budget
• Assessed and presented options and recommendation in a clear format • Circulated draft
budget to colleagues and managers for input
Part 3.
Page 25 of 34
Students must finalise the 2019 and 2020 budget for the Nara Business Hotel by completing the
following tasks.
 Task 1
a) The finance department informs you that based on organisational policy and procedures
whenever there is a shortfall in the budget a short term loan is taken out to cover the amount.
You must attend a meeting with the ANZ Bank Manager (role played by classmate) to discuss
financing options based on your understanding of the policy and the budget. In your meeting
present your case to the manager and negotiate a loan amount and loan terms which will satisfy
both parties.
a) Role play
ANZ: How are you? My name's Sean. Nice to meet you.
Barry Barrington: Hello? My name is Barry Barrington . I am the financial management team
The Manager of NBH: Hi, Nice to meet you. I am Nara Hotel Financial Team Manager.
ANZ: Come in this way. Have a sit here
Barry Barrington: Thank you.
The Manager of NBH: Thank you.
ANZ: I got a your email. Want to get a $ 10.000 loan? Right?
The Manager of NBH: We measured the budget and found that we needed a loan.
Barry Barrington: Yes, it is. So we visited like this.
The Manager of NBH: Are there any financial products that we can benefit from?
ANZ: First, have you thought about the repayment period of the amount?
The Manager of NBH: Our company will repayment all the money within 1 year.
ANZ: Our bank can divide the interest payment period into 5, 10 and 15 year interest rates
according to the amount. NBH aims to repay the loan for 1 year, so you can benefit from Fixed rate,
interest in advance.
Barry Barrington: Is there a fixed period for repayment the loan?
ANZ: Our bank accepts Monthly, Quarterly, Half-yearly and Yearly. If your company repayment to
ANZ in the fourth quarter, interest is four percent. Therefore, the company should decide on this.
Page 26 of 34
The Manager of NBH: I think. We need to re-determine the correct opinion with the company.
ANZ: I'll email you with a list of the documents you need, so please bring the documents and e-
mail me again.
Barry Barrington: Yes, we will contact you when all decisions are made.
The Manager of NBH: I'll come back with the documents. Thank you for your time.
ANZ: Thank you.
Barry Barrington: Thank you. See you
b) Once you have agreed upon the loan amount and terms, make the required modifications
to your budget to incorporate the loan. In doing so, finalise your budget and ensure that all
figures are correct and ready to be used by the NBH.
Note: Make a copy of your saved NBH Budget 2019 Excel File from Part 2. Complete the activities
of Part 3, in the copy. Save and title the copy as “(your name-student ID) NBH Budget 2019 Part
3”. You must submit each Part’s excel file separately.
Attach a separate file about budget changes. (Part3 - NBH Budget 2019)
The NBH decided to get a loan through ANZ Bank.

The amount is $ 100.000.
c) Prepare a short internal report (100-150 words) which will be provided alongside your
final budget to your colleagues. Within your report highlight the changes you have made to the
draft budget to finalise it, reason as to why there was a need for the loan referring to the
organisations objectives, the shortfall found in your draft budget, and if the loan is sufficient in
achieving and overcoming these issues (which is demonstrated through your budget).
Furthermore, in your report highlight the scope of the budget and the reporting responsibilities
of each of the organisations departments as per the your response in Part 1 Task 1 (a).
The meeting is the result of communication with the final budget.

After reviewing the 2019 budget, gross profit recorded a deficit.
So I talked to the ANZ representative about the loan. Also, if you get a loan, there is information
about 4% interest payment terms for one year.
The hotel operates 50 additional rooms and offers a total of 150 guest rooms. Therefore, if you are
considering more hotel profits in the future, you should get a loan.
The hotel can repay the loan in full within one year.
The financial management team consulted with the bank enough to prepare the budget and had a
clear opinion.
Page 27 of 34
• Negotiated budget according to organisational policy and procedures
• Agreed on and incorporated modifications
• Completed the final budget in a clear format within designated timelines
• Informed colleagues of final budget decisions and application within the relevant work area,
including reporting and financial management responsibilities
Part 4.
Monitor and Review your budget by completing the following tasks.
 Task 1
a) You are conducting your annual year-end review and find that in December 2019 the
organisation had the following performance for 2019.
Occupancy Rate – 62% due to the gradual addition of new rooms and a time lag in their
occupation.
Staffing – 34 staff members needed as the new hotel premises was less efficient.
Building Maintenance – $1,250 cost per item per annum due to the signing of a new contractor.
Utilities Cost – $450 cost per item per annum due to increased electricity usage in the
establishment of the new premises.
Assess the organisations actual performance against the estimate performance and complete the
provided review form highlighting the organisations financial situation. The review form is to be
reported back to the finance department and the NBH shareholders and as such must be accurate
and detailed.
Note: input the actual performance values into your NBH Budget 2019 excel sheet and compare it
to the budget you finalised in Part 3.
Note: Make a copy of your saved NBH Budget 2019 Excel File from Part 3. Complete the activities of
Part 4, in the copy. Save and title the copy as “(your name-student ID) NBH Budget 2019 Part 4”.
You must submit each Part’s excel file separately.
Page 28 of 34
a) Attach a separate file about budget changes. (Part4 - NBH Budget 2019,2020)
b) Complete the 2019 budget, reflecting the actual performance figures. After doing so, send
an email to your finance department manager providing them with the completed 2019 budget
and performance figures as well as your completed review form. In your email highlight possible
reasons for the deviations between the forecasted and actual performance, through an analysis
of changes in the internal and external environment (approximately 150 words). Briefly explain
how these issues can be overcome.
Note: you can use the information from the previous task and Part 1 Task 1 (c).
To:manager.financedepartment@nbh.com.au
Dear. Stanley / Colleague,
he year-end budget was reviewed in December.

The year-end budget for 2019 achieved the following results:
The share of the added room was low, so the profit was lower than expected.
This is a loss for a big company.
We also hired more new employees and incurred additional unexpected costs.
As a result, there were more losses than previously expected.

The total amount is $ 946,000 loss.
To cover the cost of damages we need another plan.
We are looking forward to hearing from you.
Thank you.
Sincerely,
c) Based on the information you have collected from inputting the actual performance data
into the 2019 budget, prepare a 100 word internal memo that provides relevant information for
the 2020 budget. In your 2019 budget summary mention:
• the deviations you’ve found, the profit or loss incurred in 2019
• whether the shareholders received their returns
• if there was any cash carrying foreword from 2019 to 2020
• whether there is any loan amount that needs to borrowed or returned in 2020
Address the internal memo to your colleagues within the finance department who may be
working on the 2020 budget in the upcoming year.
Total revenue for 2019 is $ 873,000 loss.

Page 29 of 34
Shareholders did not benefit in 2019.
There was no cash flow from 2019 to 2020. The deficit continued because 50 rooms were extended and
operated.
In 2020 there are no loans to repay. We decided to pay back to the bank in a short time in a year.
• Reviewed the budget to assess the actual performance against estimated performance and prepare
accurate financial reports
• Incorporated all financial commitments into budget and budget reports
• Investigated and taken appropriate action on significant deviations
• Analysed changes in internal and external environment and made necessary adjustments
• Collected and recorded relevant information to assist in future budget preparation
APPENDICES
APPENDIX: 01
CASE STUDY – NARA BUSINESS HOTEL
Background
The Nara Business Hotel has been operating within the Sydney CBD as a boutique hotel for the past
20 years. In this time the NBH has built a reputation as a high quality boutique hotel which offers
residents a unique and flawless stay in one of their 100 rooms. The hotel was initially founded by
Greg Mathews who later sold the hotel to a group of investors who have given the hotels
management to the Australian Hotel Management Group (AHMG). The AHMG is responsible for all
matters related to the operation of the hotel and are required to meet strict financial performance
Page 30 of 34
objectives. The AHMG must therefore budget all hotel expenses and regularly produce reports
which are presented to the Hotel’s investors.
Mission
The Nara Business Hotel’s mission is to consistently deliver an enjoyable and memorable
accommodation experience for travelers visiting the Sydney CBD in a business context.
Vision
The Nara Business Hotel’s vision is to become an industry leader in boutique business
accommodation.
Growth Objectives
The Nara Business Hotel has been known for its boutique size. However, over the past 5 years the
demand for rooms in the NBH has been far greater than supply. As such, many residents are left
upset when they cannot get a booking. The investors wish to overcome this problem, and have
asked the AHMG to budget for the expansion of the hotel. Additionally, the investors wish to
achieve a 50% growth in profits over the next 2 years.
In order to achieve these growth objectives the AHMG has decided to expand the hotel by
introducing 50 new rooms. They believe that due to the high demand for rooms the full cost of the
expansion will be recovered within a year, making the expansion a viable business opportunity.
Forecast Revenue Figures for 2019 and 2020
Number of Rooms Revenue Per Room Occupancy Rate

2019 150 $90,000 67%
2020 150 $90,000 91%
Note: the occupancy rate is lower in 2019 due to the time required to furnish the 50 new rooms
early in the year.
Organisation Finance Policy and Procedures
Reporting Policy
The Nara Business Hotel requires its financial managers to report deviations between the
forecasted budget and actual budget to the Hotel’s investors. The managers are only required to
report upon deviations of 5% or greater.
Financing Policy
The Nara Business Hotel requires its financial managers to responsibly manage the cashflows of the
hotel. If there is a need to raise cash for hotel operations or expansion the policy requires the
financial management team uses short term loans from ANZ Bank. The loans are typically 1 year
Page 31 of 34
long and at an interest rate of 4% and the loan amounts are rounded to the nearest hundred
thousand.
Staffing Policy
The Nara Business Hotel prioritises excellent customer service and as such the policy requires
employing 1 staff member per 5 rooms. For example, if the hotel has 100 rooms, 20 staff members
will need to be actively working within the hotel at any given time.
Corporate Real Estate Policy

The Nara Business Hotel policy requires that its real estate assets are rented and not bought. The
current hotel building is rented at the rate of $3,000,000 per annum and which equates to $30,000
per room per annum. The Hotel policy requires that any future real estate that is to be attained is
negotiated to the same rate of $30,000 per room per annum.
Hotel Maintenance Policy

The Nara Business Hotel policy requires that every year 10 existing rooms are completely
refurnished. The cost of completely refurnishing a room is $20,000 as per the Hotel’s contractor
agreements. This policy ensures that the hotel’s rooms are up-to-date and the décor is of latest
style. Additional rooms may be refurnished based on management’s requirements, however a
minimum of 10 old rooms must be refurnished annually.
Australian Hotel Management Group Agreement

As per the agreement between the Nara Business Hotel and the Australian Hotel Management
Group, the AHMG is responsible for the Hotel’s management for a 40 year period at the rate of
$1,000 per room per annum.
Investor Returns Policy

The Nara Business Hotel policy requires it’s financial managers to provide a fixed return of
$2,000,000 to its investors per annum. Any additional income/cashflow will be reinvested into the
business in the next year.
APPENDIX: 01
ANNUAL YEAR-END FINANCIAL PERFORMANCE REVIEW FORM
NBH Annual Year-End Financial Performance Review Form

Name of Reviewer:
Date:
Year in Review:
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What was the profit for the year in review? Please provide a short description and justification.
Was there any exceptional financial activity which has caused the year in review’s financial
performance to be different from previous years?
Were there any deviations greater than 5% in the year in review from the budget?
Has the year in review met it’s investor return requirements of $2,000,000? If not, please
explain.
Signature of Reviewer:
APPENDIX: 03
INTERNAL MEMO TEMPLATE
Nara Business Hotel – Internal Memo

Name:
Date:
Department:
Page 33 of 34
Memo Subject:
Notes:
Page 34 of 34

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UNIT OVERVIEW .........................................................................................................................................................