84133737_BSBFIM501A_Assessment_21042015_1

CRICOS Code: 03243A ©Harvest Education Technical College 2015 07 3172 7257 www.hetc.edu.au

Assessment Tools BSBFIM501A Manage Budgets and Financial Plans ASSESSMENT 1: PROJECT (Due in Week 5)

Submission details This Assessment Task is due on the LAST CLASS of WEEK 5. Any variations to this arrangement must be approved in writing by your assessor. Submit a printed version of this document with any required evidences attached. Submission Date/s

_______________ ___________________________

Submission Number

1

Student’s Name

___________________________________________

Student Number

___________________________________________

Assessor’s Name

___________________________________________

2

Trainer/Assessor Instructions: Please explain to the students that this is an individual project. Submissions over the email are NOT permitted. 1. Prepare a checklist for team members that is suitable for giving at an induction that defines the following basic accounting terms and principles, and explains their importance in the financial process in respect of your organisation. Attach examples with this response. Using the following table or produce your own.

BSBFIM501A Manage Budgets and Financial Plans Assessment 21042015

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CRICOS Code: 03243A ©Harvest Education Technical College 2015 07 3172 7257 www.hetc.edu.au

Term Definition

Definition and Examples e.g. how to work with and interpret

Chart of accounts

Revenue and Expenses

Profit and loss Statement

Liabilities

Invoices

Ledgers

Cash flow

Financial audit

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CRICOS Code: 03243A ©Harvest Education Technical College 2015 07 3172 7257 www.hetc.edu.au

2.

Use a flow chart or diagram to describe the financial management processes a manager of a work team is likely to be responsible for in your organisation. Show what tasks they are responsible for and those delegated to group members.

3.

Explain how a manager ensures that legislative requirements for financial management are complied with. Include all items that must be reported to the Australian Taxation Office. Outline the procedures followed by your organisation to ensure that the management of those budgets satisfies the compliance requirement.

4.

Prepare a procedural outline for a team member that explains their duties and reporting responsibilities for each of the following (including GST requirements set by ATO): a. Invoicing clients b. Making purchases c. Maintaining journals

5.

Develop a communication strategy for disseminating the budget to your team members. Provide time lines and detail what feedback you would require from team members.

6.

Describe how you would respond if a team member has read the budget and asks: a. „What is the difference between “gross profit” and “net profit”? b. „Why do we have to know about the budget at all? We just do the work we are responsible for.‟ c. „What support will you give us to help us achieve budget?‟ d. „I can‟t operate with the budget allocation given to me! The salaries and related expenses alone will take 105 per cent of the allocation. And there is a further 15 per cent required to cover other expenses! I‟ll just have to run up a deficit!‟

7.

Describe what you would do in the following situations. a. You have prepared a draft budget with the support of your manager and the organisation‟s finance manager, but when you and your team discuss it, they believe they need more resources to be able to deliver on time. You know that funds are tight. b. The cash flow predictions provided to you by your manager do not correspond with your analysis. Describe the process you undertake to address the different predictions. c. You initial plan needs to be varied because there are not sufficient funds to achieve what you want to achieve. List a number of contingency plans for reducing your budget in terms of costs for staffing, consumables and for unforeseen difficulties such as prolonged staff absence through illness. What negotiation will you need to undertake in an attempt to get agreement. Describe your approach to negotiation. d. Your budget report after the first three-month period in the financial year shows an unfavourable variance in expenditure, with salary and wages overspent by 20 per cent equating to $30,000 (Actual $180,000 – Budget of $150,000), with all other expenditure areas close to budget. Income from goods and services produced is also according to the report on target. Describe the processes you follow to identify the cause, including the documents and data you analyse.

8.

You have just accepted a new job for a new company that has yet to start trading. You will be the budget manager in due course, but initially you have to set up systems that

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CRICOS Code: 03243A ©Harvest Education Technical College 2015 07 3172 7257 www.hetc.edu.au

will be used in the organisation. Describe what systems you would put in place for financial record keeping. Describe the monitoring process you would put in place to ensure records were appropriately maintained.

ASSESSMENT 2: SHORT ANSWERS AND CASE STUDY (Due in Week 5) Part A Please answer the following questions. 1.

What legislative and organisational compliance requirements may apply to financial management? Describe how you might comply with these requirements.

2.

Describe five different source documents for compiling financial reports and describe what reports may be created from these documents.

3.

What is the relationship between setting a budget and setting key performance indicators (KPIs)?

4.

Why is it important to report progress to budget regularly? Is it possible to report too frequently?

5.

Define and provide two examples each of: a) Direct costs b) Overhead costs c) Fixed costs.

6.

Why is it important to monitor improvement actions after they are implemented?

7.

Why might you need to negotiate a change to a budget? Describe the process you would follow to negotiate this change at your organisation.

8.

How might you ensure the method for communicating budget information is accessible to all members of your team? How might this change if: a) there are part-time members of the team b) some team members are located interstate?

9.

What support might you provide to ensure your team members can complete their financial responsibilities competently?

10. What resources are provided to manage financial management processes at your BSBFIM501A Manage Budgets and Financial Plans Assessment 21042015

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CRICOS Code: 03243A ©Harvest Education Technical College 2015 07 3172 7257 www.hetc.edu.au

organisation? How might this be improved? 11. Imagine you have received a progress report that shows expenses are well under their expected level for this period. What actions might you take?

Part B Read the case study, then answer the questions that follow. The cases provide different organisational requirements, please ensure that all requirements are followed. Case study Carlos is a production manager. His area of the business produces two products. As part of the budget planning process, he is advised of the following targets:



Revenue: $200,000



Gross: $70,000

He has 2,250 hours of labour available. At a minimum, he must produce 300 units of product 1 and 100 units of product 2, to satisfy standing orders. Otherwise he is unable to respond to demand for the products. The cost and pricing information for each product is summarised below. Labour units

Product type

Labour rate

Materials cost

Unit price

Product one

2

$25

$120

$250

Product two

4

$25

$ 80

$300

1. Is the budget achievable? Develop a spreadsheet that demonstrates a work plan for achieving the required revenue and gross targets. 2. Who should Carlos consult with when developing the work plan? Why is this important? 3. What contingency plans might Carlos develop? Describe the trigger events for implementing these contingency plans and the relevant control actions. 4. What procedures should Carlos implement to record and monitor expenses throughout the budget period? 5. At the mid-point of the budget period, Carlos is asked to provide a progress report. He has produced 350 units of product one. Will Carlos have met the management‟s mid-point target of $100,000 revenue and $35,000 gross? Produce a report that demonstrates BSBFIM501A Manage Budgets and Financial Plans Assessment 21042015

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Carlos‟s progress and any variance from target. 6. What factors might have contributed to the variance reported in question 5? What contingency plan might Carlos implement to address these factors and ensure he achieves the target by the end of the budget period? 7. What improvements might Carlos make for the next budgeting period? How will these improve his financial management performance? Read the following case study and complete the questions that follow. (Questions 8-9) CASE STUDY Hasan works for a company that manufactures shower screens. He is the cost centre manager for the production area. For the four produicts they produce sales at the end of February were as follows: Product

Unit

Value ($)

Basic

150

37,500 (250 per unit)

Standard plus

250

125,000 (500 per unit)

Deluxe

200

150,000 (750 per unit)

Super deluxe

100

100,000 (1000 per unit)

The above production is standard from month to month and the costs involved are as follows: Product

Labour per unit

Material cost per

Overhead

(hours)

unit ($)

contribution per unit ($)

Basic

2.0

100

10

Standard plus

3.0

250

20

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Deluxe

4.0

480

34

Super deluxe

5.0

600

43

Labour is costed at $50 per hour and includes contributions to leave entitlements and superannuation contribution. Material costs are fixed with a supply contract for the standard quantities required each month. Hasan is advised that the company has just won an extra special order for the supply of shower screens for a refit of a hotel, and the products are required by the end of March. The quantities and agreed per unit price are shown below. Product

Required units

Price agreed per unit ($)

Basic

30

275

Standard plus

50

550

Deluxe

10

750

Super deluxe

5

900

Production for March will now be the usual monthly production as per February above, plus the new contract commitment.

8. Prepare a sales budget for March. Using the information from the above and below tables.

Product

Units

Unit price

Value

Basic

150

250

37500

30

275

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Standard plus

250

Deluxe

200

Super deluxe

100

750

5

9. Using the above information, determine the budget cost of production (labour, materials and overheads) and the profit per item that can be expected for the normal monthly production, and for each item to be produced for the special order. Please read the following Case Study then complete the question 10.

CASE STUDY Hugo is the manager of a medium-sized retailing operation and is concerned about the collection of monies for goods sold. He has a current policy for collecting monies from credit customers and all goods are sold on credit. He has actual sales data for the first six months of the financial year and projected sales figures for the six months to credit customers. He wishes to consider the impact of adjusting the policy and has two proposals in mind. The policies are as follows: Timing of payment

Payment under current policy

Projected payment under policy option 1

Project payment under policy option 2

1st month after sale

60% of monies collected

80%

90%

2nd month after sale

25% of monies collected

12%

5%

3rd month after sale

14% of monies collected

7%

3%

4th month after sale BSBFIM501A Manage Budgets and Financial Plans Assessment 21042015

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His sale figures are: Sale figures Actual for first six months

Predicted for next six months

July

$100,000

January

$120,000

August

$115,000

February

$125,000

September

$115,000

March

$125,000

October

$100,000

April

$120,000

November

$120,000

May

$120,000

December

$140,000

June

$110,000

One additional question Hugo wants answered is: Is there any advantage from a cash flow perspective of offering a two per cent discount if accounts are settled in the first month? Hugo expects that the discount offer will encourage the vast majority of customers to pay in the first month. He therefore estimates that the discount will need to be applied to 90% of the sales expected in any month. He thinks the remaining customers would pay in the next month, and no bad debts would needs to be written off.

10. Analyse the optional policies and make a recommendation to Hugo as to which policy he should consider as the better option. Include in your response a projected cash flow spreadsheet for each of the proposals. Please read the following Case Study and complete task 11.

CASE STUDY Brendon was made responsible for a new area in the company and the single product it was to produce. He keeps various records on the quantities of the new product his firm produces and the direct labour and direct material costs. It is a simple product in that there is only one raw material and labour. BSBFIM501A Manage Budgets and Financial Plans Assessment 21042015

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The budget details are as follows: Planned production: 5,000 units Direct material cost per unit: 12 kg at $6.50 per kg = $78 Direct labour cost per unit: 10 hours at $21.00 per hour = $210 The actual quantities produced and amounts used are as follows: Units produced: 5,200 units Direct material cost: 62,400 kg at a total cost of $395,320 Direct labour paid: 53,040 hours at a total cost of $1,113,840

11. Brendon has asked you to devise a performance report for this department and the single product it produces based on the records he has kept. Determine the actual direct labour cost and direct material cost per unit produced and compare these against the budgeted amounts. Present as a spreadsheet.

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