SITXFIN003 Manage finances within a budget :

Assessment cover sheet

Unit:	SITXFIN003 Manage finances within a budgetSITXFIN004 Prepare and monitor budgets
Course Name:	SIT40516 Certificate IV in Commercial Cookery
Training Package:	SIT
Assessment Type:	Written Questions, Case Study, Financial and Statistical Calculations, Project

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Attempt and Tasks		Satisfactory		Not Yet Satisfactory		Date		Assessor Signature
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	Task 2				
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All work is to be entirely of the student.

General Information for this assessment:   Read the instructions for each question very carefully.Be sure to PRINT your FIRST name & LAST name in every place that is provided.Short questions must be answered in the spaces provided.For those activities requesting extra evidence such as: research reports, essay reports, etc. The student must attach its own work formatted in double space, Arial 12 pts.All activities must be addressed correctly in order to obtain a competence for the unit of competency.If the student doesn’t understand the assessment, they can request help from the assessor to interpret the assessment.Re-submission of assessment after the term will incur additional fees.

Re-assessment of Result & Academic Appeal procedures:

If a student is not happy with his/ her results, that student may appeal against their grade via a written letter, clearly stating the grounds of appeal to the Chief Executive Officer. This should be submitted after completion of the subject and within fourteen days of commencement of the new term.   Re-assessment Process: An appeal in writing is made to the Academic Manager providing reasons for re-assessment /appeal. Academic Manager will delegate another member to review the assessment.The student will be advised of the review result done by another assessor.If the student is still not satisfied and further challenges the decision, then a review panel is formed comprising the lecturer/trainer in charge and the Academic Manager or if need be an external assessor.The Institute will advise the student within 14 days from the submission date of the appeal. The decision of the panel will be deemed to be final.If the student is still not satisfied with the result, he / she has the right to seek independent advice or follow external mediation option with nominated mediation agency.Any student who fails a compulsory subject or appeals unsuccessfully will be required to re- enrol in that subject.   The cost of reassessment will be borne by the Institute. The external assessor will base his/her judgement based on principles of assessment. These principles require assessment to be reliable, fair, practical and valid.

Academic Appeals: If you are dissatisfied with the outcome of the re-evaluation process, you have a right to appeal through academic appeals handling protocol.To appeal a decision, the person is required to complete the TKL- Request for Appeal of a Decision form with all other supporting documents, if any. This form is available via our website. The completed Request for Appeal form is to be submitted to the Student Support Officer either in hard copy or electronically via the following contact details: Student Support Officer, TKL College Suite 707, Level 7 159-175 Church Street, Westfield Shopping Centre, Parramatta, NSW 2150 , Email: [email protected] The notice of appeal should be in writing addressed to the Chief Executive Officer and submitted within seven days of notification of the outcome of the re-evaluation process.If the appeal is not lodged in the specified time, the result will stand and you must re-enrol in the unit.In emergency circumstances, such as in cases of serious illness or injury, you must forward a medical certificate in support of a deferred appeal. The notice of appeal must be made within three working days of the concluding date shown on the medical certificate.The decision of Chief Executive Officer will be final.Student would then have the right to pursue the claim through an independent external body as detailed in the students’ complaint / grievance policy.

Assessment Requirements

You are required to complete and pass every task in the assessment in order to be deemed competent.

Assessment Schedule

Task	Due Date	Student Signature	Trainer Signature	Comments
Task 1- 4	Week 3

SITXFIN003 Manage finances within a budget:

• SITXFIN003 Manage finances within a budget
• SITXFIN004 Prepare and monitor budgets.

About Your Assessments

This unit requires that you complete four assessment tasks. You must complete all tasks to achieve competency for the units in this topic.

Assessment Task	About This Task
Assessment Task 1: Written Questions	You must correctly answer all questions in this task to show that you understand the knowledge required of this topic.
Assessment Task 2: Case Study	For this task you are required to answer the questions to demonstrate your knowledge of reviewing and monitoring financial activity against a budget and recommending solutions to deviations.
Assessment Task 3: Financial and Statistical Calculations	You must correctly answer all questions in this task to show that you understand how to calculate financial and statistical information required of this topic.
Assessment Task 4: Project	For this task you are required to prepare and manage a budget over three months and prepare financial reports.

How to Submit Your Assessments

When you have completed each assessment task you will need to submit it to your assessor. Instructions about submission can be found at the beginning of each assessment task.

Make sure you photocopy your written activities before you submit them – your assessor will put the documents you submit into your student file. These will not be returned to you.

Assessment Task Cover Sheet

At the beginning of each task in this booklet, you will find an Assessment Task Cover Sheet. Please fill it in for each task, making sure you sign the student declaration.

Your assessor will give you feedback about how well you went in each task, and will write this on the back of the Task Cover Sheet.

The following outlines the requirements of your final assessment for this unit. You are required to complete all tasks to demonstrate competency for the unit/s in this topic.

Your assessor will provide you with the due dates for each assessment task. Write them in the table below.

Assessment Requirements	Due Date
1. Written Questions
2. Case Study
3. Financial and Statistical Calculations
4. Project

TASK SUMMARY

You are to answer all written questions.

RESOURCES AND EQUIPMENT REQUIRED TO COMPLETE THIS TASK

• Access to textbooks and other learning materials.
• Access to a computer, printer, Internet and applicable software (eg Microsoft Office).

WHEN AND WHERE DO I NEED TO COMPLETE THIS TASK?

• This task may be done in your own time as homework or you may be given time to do this task in class (where applicable).
• Your assessor will provide you with the due date for this assessment.

WHAT DO I NEED TO SUBMIT?

• Your answers to each question in this task.

INSTRUCTIONS

• You must answer all questions in this task correctly.
• You must answer the questions by typing your answers in Microsoft Word or a similar program. Ensure the answers are numbered to correspond with the question numbers. Your assessor will advise how to submit this assessment task.

Written Questions:

QUESTION 1

Provide an outline of what a master budget is and what it contains.

QUESTION 2

Identify the four basic financial reports and outline their purpose and content.

Question 3

Provide a brief summary of the purpose of each of the following budgets:

• Cash/Cash flow budget
• Departmental budget
• Event budget
• Project budget
• Purchasing budget
• Sales budget
• Wage budget.

QUESTION 4

Identify the purpose of the following financial records:

• Bank deposit documentation
• Bank statements
• Banking summaries
• Business Activity Statements
• Cheque books
• Credit card transaction statements
• Journal entries
• Labour and wages reports
• Merchant statements
• Merchant summaries
• Transaction reports.

Answer

QUESTION 5

What are the requirements for a tax invoice in Australia?

QUESTION 6

Research three common accounting software applications that small businesses use and summarise their functions and features.

QUESTION 7

Describe three techniques commonly used for making estimates of expense budgets.

QUESTION 8

Identify and outline the steps in the accounting cycle.

QUESTION 9

Give three examples of negative changes in the internal organisational environment which may have to be taken into account when reviewing budgets with a view to making necessary changes.

QUESTION 10

Budget formats can vary between organisations and accounting programs: list two ways a negative situation can be indicated in figures on a budget.

QUESTION 11

Discuss the role of a budget and financial reports for a business.

QUESTION 12

Discuss how changes in legislation can impact on a budget. Give three examples of legislation changes in the last decade that have had an impact on the hospitality industry and the profitability margins.

QUESTION 13

Discuss how a hospitality business might manage and recover their profit margin in a downturn in the economy.

QUESTION 14

Identify five internal sources of information that may be used as a basis for preparing a budget and forecasting income and expenditure.

QUESTION 15

Identify five external sources of information that may be used as a basis for preparing a budget and forecasting income and expenditure.

QUESTION 16

Identify and briefly summarise the four stages of a budget cycle.

QUESTION 17

1. Define the following options and approaches to budgeting:
   1. Incremental budgeting
   1. Zero-based budgeting.

• Why are ‘rolling budgets’ useful in the hospitality industry?

QUESTION 18

Complete the following table to differentiate between the ‘top down’ and the ‘bottom up’ approach to negotiating budgets.

	Description	Advantage/s	Disadvantage/s
Top down
Bottom up

QUESTION 19

Aside from income and expenditure, list seven different types of financial factors/results that may be forecasted in a hospitality budget and actuals reported.

QUESTION 20

Food wastage is an unknown cost in Australia. One thing for sure that we know is that the cost is escalating quickly. Explain what a restaurant might calculate or consider in relation to waste when preparing financial and statistical reports. Give three examples.

QUESTION 21

Explain what yield management is in relation to a hotel. Why is yield management important?

QUESTION 22

Forecasted room revenue calculations are based on the number of rooms available, the number of operating days, the average room rate and the forecasted occupancy. Calculate the room revenue (to the nearest dollar) using the data in the table below.

Number of rooms available	Forecast occupancy	Average Room Rate	Operating Days p/year	Forecasted room revenue (sales)
Example: 122	75%	$105	365	$3,506,737
50	62%	$90	310	$1,046,250
15	98%	$86	365	$4,61,433
300	89%	$220	365	$21440100

QUESTION 23

Working out how much to charge for food and drink.

1. Calculate the cost of a drink of vodka and soda (before taxes):
   1. You will need the following to make one drink – 0.03L of vodka, 0.1L of soda, 0.02 kg of lime and one straw.

• A litre of vodka costs $12.00, a litre of soda water costs $1.00, a pack of 140 straws costs

$3.00 and 1kg of limes is $2.00. If 0.03L of vodka costs $0.36 work out the cost of the soda water, slice of lime and one straw.

What is the cost of the drink (ingredients only)?

• If you wanted to make 500% on the drink how much would it be?
• What other costs may you have to calculate into the cost of this drink? List three suggestions.
• If half of the bag of limes were thrown out after being cut and not used, what is the cost of the waste?

QUESTION 24

What are the three different ways that a statistical/financial report can show variances?..

What do I need to hand in for this task?	Have I completed this?
Answers to all questions	o

TASK SUMMARY

For this task you are required to answer the questions to demonstrate your knowledge of:

• Reviewing and monitoring financial activity against a budget and recommending solutions to deviations.

RESOURCES AND EQUIPMENT REQUIRED TO COMPLETE THIS TASK

• Access to textbooks and other learning materials.
• Access to a computer, printer, spreadsheet and word processing software.

WHEN AND WHERE SHOULD THE TASK BE COMPLETED?

• This task may be done in your own time as homework or you may be given time to do this task in class (where applicable).
• Your assessor will provide you with the due date for this assessment.

WHAT NEEDS TO BE SUBMITTED?

• Your answers to all questions.

INSTRUCTIONS

Read the case study below and answer all questions correctly.

Budget review

You are an Operations Manager with Marino Enterprises and oversee the operations for six of the venues. John Marino has asked you to monitor and review specific budget figures for two businesses as presented below and present an analysis of their meaning for the organisation.

The management team are keen to identify issues that need to be addressed based on an analysis and review of the budget data in order to optimise the viability of the business while retaining market share, market position and their high product and service standards.

You have been presented with the following information:

Property 1 Selected budget data
Item	Projected/Budgeted figure	Actual figure
Room Sales	20,000,000	12,000,000
Food sales	5,000,000	9,000,000
Liquor sales	3,000,000	5,000,000
Wages	2,100,000	2,500,000
Rent	1,000,000	1,200,000
Overheads	500,000	450,000

	Property 2 Six month’s total sales figures
	Month	$ Budget	$ Actual
	July	50,000	49,300
	August	54,000	56,970
	September	58,000	66,160
	October	62,000	65,500
	November	66,000	67,570
	December	70,000	69,040

QUESTION 1

Use a spreadsheet program to calculate and facilitate the development of final figures for Property 1 as follows:

• Calculate the dollar deviations for room sales, food sales, liquor sales, wages, rent and overheads.

• Calculate the percentage deviations for room sales, food sales, liquor sales, wages, rent and overheads.

QUESTION 2

Use a spreadsheet program to calculate and facilitate the development of final figures for Property 2 as follows:

• Total the budgeted and actual sales for the 6 months.

• Calculate the dollar deviations for sales on a month-by-month basis.
• Calculate the percentage deviations for sales on a month-by-month basis.

• Calculate year-to-date budgeted totals for sales on a month-by-month basis.

• Calculate year-to-date actual totals for sales on a month-by-month basis.
  • November 25000
  • December = 27000

• Calculate the dollar deviations for YTD figures on a month-by-month basis.

• Calculate the percentage deviations for YTD figures on a month-by-month basis.

QUESTION 3

For Property 1 suggest four possible causes for the variation in room sales.

QUESTION 4

For Property 1 suggest four possible ways to manage the variation in room sales.

QUESTION 5

Identify four possible causes of the results for food sales in Property 1.

QUESTION 6

There is no need for you to investigate the ‘wages’ deviance: why might this be so?

QUESTION 7

In late June Property 1 undertook a major advertising campaign that had been factored into budgets for July: given the actual results for July, what action might you suggest to management?

QUESTION 8

Why would you want to conduct a major investigation into sales for September?

QUESTION 9

The organisation has found out that other businesses in the chain had shown a 6% positive variation in actual sales against budgeted revenue figures: list three suggestions on what might you do about this?

QUESTION 10

How might you research internal factors impacting the figures you have been given? Give three suggestions.

QUESTION 11

What could you do to research external factors impacting the figures you have been given? Give five suggestions.

QUESTION 12

List five internal source documents that you would need to refer to in order to determine profit performance for the food and beverage areas.

QUESTION 13

Which colleagues and managers might you need to share these findings with? Give five suggestions.

QUESTION 14

You briefly consider reducing staff numbers as a way of improving profit but reject the idea: what reasons might be behind this thinking?

What do I need to hand in for this task?	Have I completed this?
Answers to all questions	o

TASK SUMMARY

You are to answer all written questions.

RESOURCES AND EQUIPMENT REQUIRED TO COMPLETE THIS TASK

• Access to textbooks and other learning materials.
• Access to a computer, printer, Internet and word processing software (eg Microsoft Word).
• Calculator or spreadsheet application.

WHEN AND WHERE DO I NEED TO COMPLETE THIS TASK?

• This task may be done in your own time as homework or you may be given time to do this task in class (where applicable).
• Your assessor will provide you with the due date for this assessment.

WHAT DO I NEED TO SUBMIT?

• Your answers to each question in this task.

INSTRUCTIONS

• This is an open book test – you can use your learning materials as reference.
• You must answer all questions in this task correctly.
• You must answer the questions by typing your answers in Microsoft Word or a similar program. Ensure the answers are numbered to correspond with the question numbers. Your assessor will advise how to submit this assessment task.

QUESTION 1

Calculate Cost of Goods sold for a bar given the following information:

• Opening stock for the bar: $30,000
• Closing stock for the bar: $25,000
• Requisitions to the bar: $125,000

QUESTION 2

What is the Percentage Cost Factor for the following?

• Cost of Goods Sold: $17,800
• Revenue: $41,786.

What is the Gross Profit for the following?

• Cost of Goods Sold: $55,962
• Revenue: $134,000

QUESTION 4

Calculate Percentage Mark-Up for the following:

• Revenue: $15,000
• Cost of Goods Sold: $6,934

QUESTION 5

What is the Return on Proprietor’s Funds given the following?

• Owner’s funds: $1,200,000
• Nett profit: $365,500

QUESTION 6

Calculate Current Asset Turnover Ratio (expressed as a percentage) from the following:

• Average current assets: $2,000,000
• Sales: $350,680

QUESTION 7

What is the Gearing Ratio based on the figures below (expressed as a percentage)?

• Average liabilities: $450,999
• Average equities: $2,150,000

QUESTION 8

Calculate the Working Capital Ratio for the following:

• Current assets: $805,000
• Current liabilities: $1,450,000

QUESTION 9

What is the Quick Asset Ratio (expressed as a formula) for the following figures?

• Current assets: $2,000,000
• Stock: $55,000
• Current liabilities: $1,300,000
• Bank overdraft: $45,000

QUESTION 10

What is the Proprietary Ratio (expressed as a percentage) given the following?

• Total proprietorship: $375,000
• Total assets: $1,500,000

QUESTION 11

Calculate the gross profit margin percentage for the figures below:

• Sales: $ 2,457,983
• Gross profit: $890,816

QUESTION 12

Calculate room occupancy percentage from the following:

• Total rooms available: 1205
• Rooms occupied: 378

QUESTION 13

What is the average room rate for the following?

• Room revenue: $66,450
• Total rooms available: 524

QUESTION 14

The following ratios are used to judge the financial stability of a business: identify if the following are used to determine the short- or long-term financial stability of a business.

Name of ratio	Short-term or Long-term
Quick asset ratio

Proprietary ratio
Working capital ratio
Interest coverage

QUESTION 15

If your working capital ratio went from 2 to 1, would that generally be seen as a positive or negative movement?

QUESTION 16

Your gearing ratio has moved from 0.5 to 1.0: is that generally regarded as a Positive or Negative movement?

QUESTION 17

Your analysis of labour costs indicates negative deviations: what might you suggest to improve this situation?

What do I need to hand in for this task?	Have I completed this?
Answers to all questions	o

TASK SUMMARY

For this task you are required to prepare and manage a budget over three months and prepare financial reports.

RESOURCES AND EQUIPMENT REQUIRED TO COMPLETE THIS TASK

• Access to textbooks and other learning materials.
• Access to an accounting software package (your assessor will provide information for access to free software).

WHEN AND WHERE SHOULD THE TASK BE COMPLETED?

• This task may be done in your own time as homework or you may be given time to do this task in class (where applicable).
• Your assessor will provide you with the due date for this assessment.

WHAT NEEDS TO BE SUBMITTED?

• Part A – Email and draft budget for B&B managers’ discussion.
• Part A – Memo and draft budget for discussion and approval from Betsy.
• Part B – Memo and final budget.
• Part C – Memo.
• Part D – Email communication with supplier.
• Part D – Memo to Betsy.
• Part E – Cash flow report and memo.
• Part F – Memo.

INSTRUCTIONS

PART A

You are the manager of a small bed and breakfast owned by Marino Enterprises. Comfy Inn is located in country Victoria and was purchased by the company two years ago when the long term owners decided to sell. The B&B was sentimental to John Marino and Betsy Smith as they used to stay there in their younger days. When it came onto the market they snapped it up. Some background on the B&B – they are a small luxury homestay property that offers seclusion, privacy and romance for an adult’s only stay. There are three cabins onsite; each fully contained. They provide a full breakfast in the main house and a full bar that is open for drinks and canapés from 4pm – 6pm on Friday, Saturday and Sunday afternoons. The bar is open at other times for snacks, coffee, tea, smoothies, soft drinks and alcohol purchases. Marino Enterprises looks after the property grounds and the manager’s wage. Everything else is the responsibility of the manager who resides onsite in the main house. Your partner is employed as the

	REVENUE BUDGET – ACTUAL for 2015-2016 Comfy Inn B&B
		LAST YEAR
		Accommodation	Food	Beverages	TOTAL
	July	3,000	1,600	1,560	6,160
	August	2,800	1,800	1,600	6,200
	September	2,800	1,800	1,900	6,500
	October	3,600	2,400	1,800	7,800
	November	3,800	3,000	1,960	8,760
	December	6,000	3,800	1,700	11,500
	January	8,800	3,800	1,600	14,200
	February	8,800	4,000	1,600	14,400
	March	3,800	3,400	1,400	8,600
	April	3,600	2,600	1,200	7,400
	May	3,400	2,400	1,400	7,200
	June	3,200	1,800	1,500	6,500
	TOTAL	$53,600	$32,400	$19,220	$105,220

1. You will now meet with Betsy (role played by your assessor). She will provide you with the instructions for preparing your budget and allocating costs.

You will be required to actively participate in the meeting and take notes on the detail provided (by your assessor in the role of Betsy). Have this assessment work sheet with you to record the details and be prepared to ask questions to clarify the information provided.

Your assessor will give you details on when this meeting will be held.

In the meeting, you will need to confirm (take notes as required) the following:

1. a)     What budget you are responsible for.
   1. b)     The increases Betsy has directed you to include into the projected income budget for the next year.
      1. Accommodation
      1. Food prices
      1. Beverage prices.
   1. c)      Betsy will also give you some extra considerations during your meeting. Make note of them:

• Betsy has also provided you with the following expenditure information that you will need to consider when preparing your cash flow budget. This data has been sourced from historical data, committed costs for the B&B and Marino Enterprises policy:
• Marino Enterprises’ overheads are $2000. All individual businesses and departments pay this overhead in August of each year.
• Lease payments are $1,500 monthly.
• Combined insurance coverage to increase to $1,400 per year paid in two equal payments in March and September.
• General repairs and maintenance to the property of $4,800 pa to be budgeted monthly.

• Digital marketing and advertising costs will be $2,400 pa, payable monthly.
• Charges for out-sourced laundering is $800 per month.
• Electricity charges are payable every quarter as follows:
  • September: $2,200
  • December: $2,000
  • March: $2,400
  • June: $3,000.
• General monthly miscellaneous expenses amount to $600/month.

You also know from your experience and the management of the property that:

• You need to replace some linen and towels at the cost of $2000 and replace kitchenware consumables to the value of $1000 at some point in the year. You will need to decide when it is best to include this expenditure in your budget along with an explanation to Betsy as to why you think it is best budgeted for in those months.
• The monthly cost of F&B stock is predicted to run at 40% of the food and beverage sales. You will need to calculate this cost into your projections.
• The cost of labour is calculated at 25% of all monthly sales. You will need to calculate this cost into your projections.

• Betsy has asked you to enter the income and expenditure data she has given you plus your projections into your accounting system to prepare the draft revenue budget for the upcoming year. You may use an accounting software package or alternatively you could use a Microsoft Excel (or similar software) spreadsheet. If you use spreadsheet software make sure you use the headings: income, cost of sales, gross profit, expenses and operating profit. Enter the data with 0 decimal places.
  • a)     Prepare an email that you can send to the other managers at the B&B, and John Marino seeking their input and feedback. Attach your draft budget and ensure that you provide them with enough information so that they can make a judgement of how and why you have allocated funds as you have. Submit this email to your assessor as if they were one of the managers.

• b)     Print a copy of your draft budget and submit it to your assessor (in the role of Betsy) along with a memo explaining:
  • the extra expenditure for discussion and approval (beds and kitchen appliances)
  • a discussion on the internal and external factors that could have an impact on the budget. Discuss at least three internal and three external factors.

Answer

Date: 2/ 17/ 2023

Budget proposal subject

The                                                                                                                                                   proposed

budget is complete.

The                                                                                                                                                   cost of

meals, lodging,

and drinks has increased over the previous year. The economy is affected by both internal and foreign causes. The success of an organization may be affected by uncontrolled elements such as the economy, politics, rival businesses, clients, and even the weather. This contrasts with internal elements like personnel, business culture, procedures, and money, all of which seem to be under your control.

What do I need to hand in for Part A of this task?	Have I completed this?
Email and draft budget for B&B managers’ discussion	o

Memo and draft budget for discussion and approval from Betsy	o

PART B

Betsy has come back to you with some changes to be made to the draft budget. These changes will have come via email or feedback on your hard copy draft. Betsy also thinks that you have over calculated the cost of stock and the wages at 25% is too high. She has asked you to consider options for reducing the cost of both without effecting customer service levels, the quality of product and of course the income. She has also asked you to have the final draft of the budget back to her within the week.

1. Provide at least three recommendations for changes to the budget that will satisfy Betsy’s requests in a memo. It is your responsibility to meet the budget so you can choose to make recommendations to increase income, decrease expenditure wherever you see fit or even negotiate not to make any changes to the expenditure.

Make the changes to your budget in the accounting software. Produce a final budget report and submit it to your assessor along with a memo outlining the changes you have (or have not) made with an explanation justifying your decisions. In your justifications include the advantages and disadvantages of accepting your changes. Submit your memo and report to your assessor by the due date.

What do I need to hand in for Part B of this task?		Have I completed this?
Memo and final budget	o

PART C

Betsy has approved your budget and you need to sit down with the short order cook to discuss the budget as they do all of the ordering and are responsible for meeting the food and beverage budget requirements. Assume that one of your recommendations to Betsy was to drop the cost of food purchases without dropping the quality. The short order cook is not happy with this decision and you need to collaborate with them to come up with the alternative options. The B&B is known for its exquisite breakfasts and currently, all food is sourced locally from individual suppliers, and where possible, organic produce. Everything is made from scratch and most items of the menu are made with fresh ingredients. The menu is as follows: Homemade bircher muesli with seasonal fruit compote and activated nuts.Baked french toast with fresh seasonal fruit and blackberry compote.Buttermilk pancakes with orange cardamom syrup.Three egg omelette with your choice of fillings – chorizo, bacon, mushrooms, spinach, feta, goat cheese, brie, blue cheese, vintage cheddar and tomatoes.Pumpkin and spinach quiche with rocket breakfast salad.Eggs benedict with your choice of ham, smoked salmon, mushrooms or bacon.Corn and zucchini fritters with a delectable potato rosti and breakfast salad and salsa.The world’s best chicken and champagne breakfast.The big breakfast with steak, pork and fennel sausages, bacon, tomatoes, mushrooms, spinach, potato rosti and toast.Avocado smash with feta and oven roasted capsicum on your choice of four different breads.Good ole’ bacon and eggs on your choice of bread. You believe that there are several ways to reduce the costs.

1. Work with one other student in the roles of manager and short order cook to discuss the final budget, explain what their role is in terms of financial management (to stay within the budget, save money where possible) and together come up with a list of at least four recommendations to reduce the costs.

• Write a memo to your assessor with your recommendations for reducing the cost of the menu. You will need to make sure that your recommendations do not have an impact on the level of customer service and the B&Bs reputation for exquisite breakfasts.

What do I need to hand in for Part C of this task?	Have I completed this?
Memo	o

PART D

It is September and the budget is as follows:

	July Budget	July Actuals	August Budget	August Actuals
INCOME
Accommodation	3150	5020	2940	3670
Food	1680	1820	1890	2040
Beverages	1638	1680	1680	1896
TOTAL REVENUE	6468	8520	6510	7606
EXPENSES
Overhead
Stock	1,327	2,100	1,428	2,300
Lease	1,500	1,500	1,500	1,500
Repairs/maintenance	400	600	400	300
Advertising	200	200	200	200
Laundry	800	1,000	800	950
Wages	1,617	1,532	1,628	1,450
Miscellaneous	600	560	600	400
TOTAL EXPEND.	6,444	7,492	6,556	7,100
+/-	24	1,028	-46	506
Cash on hand: start	10,000	10,000	10,024	11,028
Cash on hand: end	10,024	11,028	9,978	11,534

You as the manager and the small order cook have agreed to speak to your fruit and vegetable supplier to see if there are any possibilities of reducing the cost of your purchases. You want to reduce your delivery from 4 days per week to twice a week and rather than telling them what fruit and vegetables you want, you are requesting them to select the best quality for the cheapest price, ie the cheapest on the day.

Also as part of cost savings you have had to make the decision to move away from local suppliers of shelf items such as porridge, flour, herbs and spices, sugar, etc. Now that Costco has opened you have the option of buying in bulk. You have calculated that this will save you approximately $3,000

– $4,000 per year.

1. Enter the above budget income and expenditure amounts for July and August to produce a suitable report.
2. Draft the communication with the supplier outlining your request and ask them to provide you with the best possible pricing structure. You will also need to influence their decision by reminding them that the B&B wants to stay with local producers and their quality is the best. Your communication should be formatted professionally and written clearly and in a suitable language for the audience. Submit this communication to your assessor.

• Draft a communication to Betsy regarding your evaluation of the budget – how you are feeling, how in your effort to reduce expenditure, this has caused a slump in customer service, your recommendations for changes to the budget and the impact that the changes will have – positive and negative. You will need to influence Betsy so ensure you demonstrate that your month-to- date actuals are ahead of budget and how you are saving money. Include your report in your communication to Betsy.

What do I need to hand in for Part D of this task?	Have I completed this?
Email communication with supplier	o
Memo to Betsy	o

PART E
It’s the beginning of November and the following income and expenses are for October. Invoices received: Patches Fruit and Veg                     $522 Dan Murphy’s                                  $160 Laman’s Meats                                $340 Olsen Laundry                                 $400   Receipts: Costco                                              $178   Credit Card Payments (guests):
	C. James	$590
	–     Accom	300
	–     Food	230
	–     Bev	60
	F. Dunkertin	$1140

	–     Accom	600
	–     Food	420
	–     Bev	120
	M. Tan	$792
	–     Accom	450
	–     Food	286
	–     Bev	56
	J. Kelly	$1074
	–     Accom	300
	–     Food	410
	–     Bev	364
	L. Keen	$760
	–     Accom	450
	–     Food	310
	–     Bev	0
	B. Smith	$214
	–     Food	214
The last two months have seen some changes. There was a major hail storm in the area which caused damage to one of the cabins. The storm caused a lot of damage and the cabin has been uninhabitable for 5 weeks across September and October. The occupancy rate has dropped to 69%. The insurance company is paying for the majority of the damage but $5,000 will need to be paid out of pocket.

1. Use the information above to update the budget in the blank cells.

	September Budget	September Actuals	October Budget	October Actuals
INCOME
Accommodation	2,940	2,028	3,780
Food	1,890	1,228	2,520
Beverages	1,995	1,296	1,890
TOTAL REVENUE	6,825	4,552	8,190
EXPENSES
Overhead	0	0	0	0
Stock	1,554	1,180	1,764
Lease	1,500	1,500	1,500	1,500
Insurance	700	700	0	0
Repairs/maintenance	400	380	400
Advertising	200	200	200	200
Electricity	2,200	2,200	0	0
Laundry	800	500	800
Wages	1,706	3,300	2,048	2,800
Miscellaneous	600	290	600	700
TOTAL EXPEND.	9,660	10,250	7,312
+/-	-2,835	-5,698	878
Cash on hand: start	9,978	11,534	7,143
Cash on hand: end	7,143	5,836	8,021

• Create a report outlining the cash flow and submit it to your assessor with an explanation of how you might recover from the deficit this month. Make at least two recommendations for cash recovery in September/October.

Answer

Accommodation
Food	1,932	2,167
	2,534	1,875
Electricity

Stock

Memo:

To: Assessor

From: Cash recovery Officer Date: 8/4/2021

Subject: Expenses

The Two recommendation for cash recovery is as follow:

Reduce the expenses of wages, Electricity, Laundry and other expenses. Update the budget of September and October is recommendation to reduce the expenses in September and October.

What do I need to hand in for Part E of this task?	Have I completed this?
Cash flow report and memo	o

PART F

It is the end of December and the actual cash amount is down 53% on the original projection. A large contributing factor is that income targets have not been met and the food and beverage budgets have been over spent by 20%. Betsy has asked you to come up with recommendations to solve the income problem, forecast for the remaining six months of the financial year and communicate the new targets and the importance of meeting budgets to the cook. The good news is that you have heard through the grapevine that there are a number of events happening in the region in the last half of the year. These are weekday tourism events and there are a number of big construction projects where employees drive-in and drive-out for shifts Monday to Friday.

1. What sources of information might you need to set realistic projections for the rest of the year, including finding out more information about what is coming up in the region? Make a list of at least four people or places you could seek information from.

• Identify at least three solutions for the income slump. The solutions should concentrate on increasing income and revenue rather than on reducing expenses.

• Write a memo or email to Betsy and the Cook at the B&B outlining the answers to the above questions and including a discussion aimed at the cook about the importance of meeting budget restrictions, what the cook should do if they are having trouble meeting the budget or find it challenging keeping relationships with suppliers. Submit your memo to your assessor in the role of Betsy.

What do I need to hand in for Part F of this task?	Have I completed this?
Memo	o

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