Prepare and monitor budgets

SITXFIN004

Unit Knowledge Assessment (UKA):

1. 4 Business considerations are:
• Analysis from past trend
• Organisational goals
• …………….
• ……………………..

2. Page 7, 8

3. Page 8

4. Page 8, 9

5. The bottom up approach ensures that all staffs are involved in the preparation of the
budget.
……………………………
……………………….

6. Draft budget should include:

• All projected incomes
• Expenses
• …………………………
• …………………..

7. It helps colleagues to:

• Read and access the budget information
• …………………………….
• ………………………
• ………………………………

8. The people are:

1. Budget committee
2. ………………………..
3. ………………..
9. Support the budget:

Book page 18

10. The aspects are:

1. ……………………..
2. …………………
3. ………………………………..

Book page 16

11. Usually by the end of the financial year for the next financial year.

12. To provide an overall picture of the budget performance

………………………………

13. Usually monthly. But it will depend on the specific department or industry.

14. Book page 21

15. It should be compared with the budgeted figure.

16. The front line staff will have the idea of the reasons for the variance
…………………………….

………………..

17. Book page 24

18. So that you can catch any variances in time.

19. To help:

Check all reports are produced by the business over a certain amount of time

20. Xero/MYOB/Cashwhiz/QuickBooks, etc.

21. Page: 18, 19

Wage budget: The budget for all wages for all staff from different departments.
Unit Skills Assessment (USA):
Part 1:

Task 1:

a) The nature and purpose of the budget:

• To calculate and identify the potential revenue and necessary expenses which will be
incurred in 2019 and 2020.
• The budget allows the hotel to function in a planned manner and manage their finances
and to make more profit.
• The NBH’s goal to increase room numbers by 50.
• The NBH’s goal to expand the hotel’s revenue by 50% in next 2 years.
• To be transparent to all stakeholders regarding the present and future financial situation
of the business.

The scope of the budget:

• To identify costs
• To determine inefficiencies
• ……………
• …………………………….
• ………………………….

The impacts upon the various departments of the hotel:

Hospitality:

The budget provides the operations department an idea about how to manage hospitality
requirements.

• Managing the kitchen

• Extra equipment and tools
• ……………………….
• ……………………..
• …………………………….

Marketing:

The budget provides the marketing department the estimation of costs needed for marketing.

• The cost of the hotel management software

• ……………………..
• ……………………
Finance:

The budget provides the finance department with clear and concise information about the
financial health of the organisation.

• The NBH’s ability to meet its financial obligations over the budgeted years
• …………………………
• ……………………………
• …………………….

Human resource:

The budget provides the human resources department with a clear understanding as to how many
staff members they can afford to hire.

• Hiring extra staff

• Staff wages, superannuation and insurance
• ………………………
• ……………………..
• ………………

b) Following budgeted expense will need to change:

• Staffing
• Room Cleaning
• Room Furnishing
• Building Maintenance
• …………………………….
• ……………………
• ………………….
• ……………….

Feedback:

1. Yes this is correct, all the expenses which need to be changed are listed.
2. Yes you are correct. But I think that you have missed out the kitchen operation costs
and equipment maintenance cost as well. You should consider both of these costs.
 c) The internal factors which can impact the budget:

• Hiring new staff can increase the staffing costs.

• The increased cost of marketing campaigns.
• …………………………….
• ………………………………….

The external factors which can impact the budget:

• Political: Any change in government policies.

• Economic: Any change in global economy.
• Social: Change in customer needs.
• Technological: Introduction of new online technology.
• Legal: Any changes in laws and regulations.
• Environmental: Any natural disaster or pandemic.
 d) E-mail:

To: manager.financedepartment@nbh.com.au
From: Julie.pa@gmail.com (Write down your e-mail address)

Dear Barry,

Hello! Hope you are doing well. I am writing you in details regarding my findings on our
new budget.

The nature and purpose of the budget:

• To calculate and identify the potential revenue and necessary expenses which will be
incurred in 2019 and 2020.
• The budget allows the hotel to function in a planned manner and manage their
finances and to make more profit.
• The NBH’s goal to increase room numbers by 50.
• The NBH’s goal to expand the hotel’s revenue by 50%.
• To be transparent to all stakeholders regarding the present and future financial
situation of the business.

The scope of the budget:

• To identify costs
• To determine inefficiencies
• ……………
• …………………………….
• ………………………….

Following budgeted expense will need to change:

• Staffing
• Room Cleaning
• Room Furnishing
• Building Maintenance
• …………………………….
• ……………………
• ………………….
• ……………….
The external factors which can impact the budget:

• Political: Any change in government policies,

• Economic: Any change in global economy.
• Social: Change in customer needs.
• Technological: Introduction of new online technology.
• Legal: Any changes in laws and regulations.
• Environmental: Any natural disaster or pandemic.

Hope this will assist you further. If you have any queries then please don’t hesitate to ask me.

Thank you.

With regards.

Yours sincerely

(Write down your name)

Part 2:

Task 1

a)

Complete the excel file for 2019 budget for part 2

Complete the excel file for 2020 budget for part 2

b)

Summary:

2019:

Total Income: $........................

Total Expenditure: $.....................................

Total Profit/Loss: $...................

2020:

Total Income: $...................

Total Expenditure: $..................

Total Profit: $..............

Net Profit: $....................

Explanation:

The expansion objectives are not feasible as there is a shortfall in the 2019 budget of $187,250.
Although, it does correct itself in 2020, the shortfall will need to be addressed for the 2019
budget as there is not enough cash to fund the expansion.
c) E-mail:

To: manager.financedepartment@nbh.com.au

From: Julie.pa@gmail.com (Write down your e-mail address)

Dear Barry,

Hello! Hope you are doing well. I am writing you this e-mail in order to inform you regarding
the budgets. Please check the attached files for the draft budget for the financial year 2019 and
2020.

Budget summary:

2019:

Total Income - $........

Total Expenditure - $.....

Total Profit/Loss - $.....................

2020:

Total Income - $........

Total Expenditure - $..........

Total Profit - $...........

Net Profit - $.................

Explanation:

The expansion objectives are not feasible as there is a shortfall in the 2019 budget of $187,250.
Although, it does correct itself in 2020, the shortfall will need to be addressed for the 2019
budget as there is not enough cash to fund the expansion.

Please give your valuable opinion on this matter.

Thank you. With regards.

Yours sincerely

(Write down your name)

Part 3:

Task 1:

a) Facts:

• There is a shortfall due to the expansion goals.

• But the desired overall outcome will be increased and will be profitable for NBH.

The agreed loan terms:

• Time: 1 year loan

• Interest: 4% interest
• The amount: $200,000

b)

Complete the excel file for 2019 budget for part 3

Complete the excel file for 2020 budget for part 3

c) Report:

To all staff:

The reason for taking loan from ANZ bank:

There was a shortfall found in the draft budget and that is why the loan was needed.

Loan term:

• Time: 1 year loan

• Interest: 4% interest
• The amount: $200,000

Final budget summary:

2019:

Total Income: $.........

Total Expenditure: $.........

Total Profit: $...............

2020:

Total Income: $...........

Total Expenditure: $............

Total Profit: $...........

Net Profit: $.....................

Reporting responsibilities:

Hospitality:

……………………

Human resource:

…………………..

Finance:

…………………..

Marketing:

……………………

All departments:

…………………………………
Part 4:

Task 1:

a)

Complete the excel file for 2019 budget for part 4

Present the Annual Year-end Financial Performance Review Form.

ANNUAL YEAR-END FINANCIAL PERFORMANCE REVIEW FORM

NBH Annual Year-End Financial Performance Review Form

Name of Reviewer: Your name
Date: 25.12.2019
Year in Review: 2019

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?
In 2019 the NBH had a major expansion and acquired 50 new hotel rooms. As a
result there was a lot of unexpected financial activity.
Were there any deviations greater than 5% in the year in review from the
budget?
…………………………………………..
Has the year in review met its investor return requirements of $2,000,000?
If not, please explain.
Due to the hotel’s expansion the hotel’s shareholders have agreed to leave their
returns for this expansion to take place.
Signature of Reviewer: Your name
b) E-mail:

To

The Manager Finance department

NBH

Hi Barry,

Hope you are doing well. Please check the attached files for the actual budget for the year 2019
and the completed review form.

Reasons for deviations:

• Increased staff cost

• Increased building maintenance cost
• …………….
• ………

Ways to overcome the deficiencies:

• Doing intense market research

• Analyse internal and external factors
• ……………………..
• …………………….
• ………..

Please check everything and provide your valuable feedback.

With regards.

Thanking you.

Yours sincerely

Your name.
c) Internal Memo:

INTERNAL MEMO

Nara Business Hotel – Internal Memo

Name: Your name
Date: 31/12/2019
Department: Finance
Memo subject: Budget information

Deviation resulted due to:

• Increased staff cost

• Increased building maintenance cost
• …………………
• ………….

Profit or loss incurred in 2019:

…………………………………………….

Shareholder’s loss:

The shareholders did not receive their returns due to the investment in the hotel
expansion.

Cash carrying foreword from 2019 to 2020:

This amount of (-) $953500 will be carried forward as negative amount from
2019 to 2020.

Loan term and amount:

Time: …………….
Interest: ………
The amount: ………………………
Assessment submission:

UKA:

Through the online portal (21 questions)

USA:

1 word file and 6 excel files (All together 7 files for your USA)

1. Answer book word file with all USA tasks

2. Excel file for 2018 budget (for carry forward balance)
3. Excel file for 2019 budget for part 2
4. Excel file for 2020 budget for part 2
5. Excel file for 2019 budget for part 3
6. Excel file for 2020 budget for part 3
7. Excel file for 2019 budget for part 4