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Assessment Task 1 (BSBFIM501) Assessment Task 1 BSBFIM501 Manage budgets and financial plans Plan financial management approaches Submission details Candidate’s name Phone no. Assessor’s name Phone...

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Assessment Task 1 (BSBFIM501)
Assessment Task 1    BSBFIM501 Manage budgets and financial plans
Plan financial management approaches
Submission details
    Candidate’s name
    
    Phone no.
    
    Assessor’s name
    
    Phone no.
    
    Assessment site
    
    Assessment date/s
    
    Time/s
    
The assessment task is due on the date specified by your assessor. Any variations to this a
angement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below
for details.
Performance objective
The candidate will demonstrate the ability to plan financial management approaches.
Assessment description
In response to the scenario provided, you will clarify budget plans with your manager and negotiate changes to the budget. You will then identify and analyse a risk to the budget and prepare a contingency plan to prevent or minimise the risk.
Procedure
1. Read the scenario provided in Appendix 1 to this assessment task and tasks A
and B.
2. Prepare to meet with your manager (assessor) to clarify budget and negotiate changes:
a. identify areas of the budget that are not achievable, inaccurate or unclea
. prepare to negotiate necessary changes to the budget
c. set up a time with your manager to meet.
3. Meet with your manager (assessor) to clarify budget and negotiate changes:
a. identify at least two issues for clarification
. negotiate at least two changes
c. include discussion of basic accounting principles
d. refer to relevant legislation and ATO requirements
e. refer to principles and techniques of managing budget items
f. take and keep notes of agreed changes.
4. Use the template provided in Appendix 3 to this assessment task to prepare a contingency plan document for persistent risks after budget changes
5. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.
Specifications
You must:
· meet with your assessor to clarify budget and negotiate changes
· provide a contingency plan
· submit your notes.
Your assessor will be looking for:
numeracy skills to read and understand a budget and negotiate budget re-allocations
knowledge of basic accounting principles to identify and use account balances
knowledge organisational requirements related to financial management such as contained in organisational policies and procedures
knowledge of principles and techniques involved in budgeting.
Adjustment for distance-based learners
No variation of the task is required.
Documentation can be submitted electronically or posted in the mail.
Appendix 1 –Scenario
Big Red Bicycle Pty Ltd is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which it sells to retailers in the domestic Australian market.
The senior management structure of the company appears below.
    Person
    Position
    Michelle Yeo
    Chief Executive Officer (CEO)
    Tom Copeland
    Managing Directo
    John Black
    Chief Financial Officer (CFO)
    Stuart LaRoux
    Operations General Manage
    Pat Roberts
    Senior Accountant
    Sam Gella
    Sales General Manage
    Charles Pierce
    Production Manage
    Holly Burke
    HR Manage
According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The chief risks to this goal are:
· poor sales due to economic downturn
· increases in expenses such as wage expenses.
In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
Role
You are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect the both the needs and importance to the business of Cost Centre A.
Task A
The Sales General Manager, Sam Gellar, has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the budget projections are achievable, accurate, understandable and fair.
She would like you to look closely at the budget for your cost centre, note any changes you think are necessary, develop an argument for the changes and negotiate those changes with her.
Information you are aware of includes:
· Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) are generally 30% less than the second quarter (Q2).
· Sales in Q2 depend on completion of 90% of repair and maintenance.
· Sales for Q2 have been estimated to be $1,000,000.
· Commission negotiated with members of the sales team is now at 2.5%.
Task B
It has come to the attention of the Managing Director, Tom Copeland, that due to the cu
ent economic climate, sales volume may be 20% below target this financial year. Tom is wo
ied that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company’s ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid Q2, when sales data for the company’s product are in.
As a special project, the Managing Director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%.
As per organisational policy you should use the contingency plan template provided.
Appendix 2 – Budgeting and finance policy
Budget preparations
The business plan will set the key parameters for all financial budgeting.
Variations to the business plan must be approved by the CEO and senior management strategic committee.
Prior period results are to be analysed to identify the profit level of cost centres, identify co
elations between financial statistics and to set key performance indicators and benchmarks for future budgets.
The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and CFO.
A CAPEX budget will be developed from the approved business plan.
A detailed sales budget must be completed before completing the profit budget for the year.
A cash flow budget covering the first three months will be prepared after the profit budget is completed.
A master budget including profit projections will be completed from which cost centre allocations will be made.
Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available as a separate document. Where possible, the notes should justify the basis on which the estimates were made.
Overheads (non-direct expenses) will be apportioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.
All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment.
The financial cycle for budgeting purposes will be yearly ending 30 June.
Financial delegations
· Each manager is responsible for achieving the revenue budgets agreed to by the budget committee.
· Each manager is responsible to approve, by signing the necessary paperwork, all expenditures that fall within their area of responsibility.
· Expenditures must be within the budget guidelines for the individual departments.
Format for budgets and reports
All budgets must include the following details:
· name of the person who prepared it
· cost centre (if applicable)
· name of the budget
eport, i.e. sales, expenses, CAPEX, cash flow, budget variation report
· period of the budget.
Appendix 3 – Budgets and templates
Master budget with profit projections
    Big Red Bicycle Pty Ltd
    Master Budget FY 2011/2012
     
    FY
    Q1
    Q2
    Q3
    Q4
    REVENUE
    
    
    
    
    
    
    Commissions (2% sales)
    60,000
    15,000
    15,000
    15,000
    15,000
    
    Direct wages fixed
    200,000
    50,000
    50,000
    50,000
    50,000
    
    Sales
    3,000,000
    750,000
    750,000
    750,000
    750,000
    
    Cost of Goods Sold
    400,000
    100,000
    100,000
    100,000
    100,000
    Gross Profit
     2,340,000
    585,000
    585,000
    585,000
    585,000
    EXPENSES
    
    
    
    
    
    General & Administrative Expenses
    
    
    
    
    
    
    Accounting fees
    20,000
    5,000
    5,000
    5,000
    5,000
    
    Legal fees
    5,000
    1,250
    1,250
    1,250
    1,250
    
    Bank charges
    600
    150
    150
    150
    150
    
    Office supplies
    5,000
    1,250
    1,250
    1,250
    1,250
    
    Postage & printing
    400
    100
    100
    100
    100
    
    Dues & subscriptions
    500
    125
    125
    125
    125
    
    Telephone
    10,000
    2,500
    2,500
    2,500
    2,500
    
    Repairs & maintenance
    50,000
    12,500
    12,500
    12,500
    12,500
    
    Payroll tax
    25,000
    6,250
    6,250
    6,250
    6,250
    Marketing Expenses
    
    
    
    
    
    
    Advertising
    200,000
    50,000
    50,000
    50,000
    50,000
    Employment Expenses
    
    
    
    
    
    
    Superannuation
    45,000
    11,250
    11,250
    11,250
    11,250
    
    Wages & salaries
    500,000
    125,000
    125,000
    125,000
    125,000
    
    Staff amenities
    20,000
    5,000
    5,000
    5,000
    5,000
    Occupancy Costs
    
    
    
    
    
    
    Electricity
    40,000
    10,000
    10,000
    10,000
    10,000
    
    Insurance
    100,000
    25,000
    25,000
    25,000
    25,000
    
    Rates
    100,000
    25,000
    25,000
    25,000
    25,000
    
    Rent
    200,000
    50,000
    50,000
    50,000
    50,000
    
    Wate
    30,000
    7,500
    7,500
    7,500
    7,500
    
    Waste removal
    50,000
    12,500
    12,500
    12,500
    12,500
    TOTAL EXPENSES
    1,401,500
    350,375
    350,375
    350,375
    350,375
    NET PROFIT (BEFORE INTEREST & TAX)
    938,500
    234,625
    234,625
    234,625
    234,625
    Income Tax Expense (25%Net)
    234,625
    58,656
    58,656
    58,656
    58,656
    NET PROFIT AFTER TAX
    703,875
    175,969
    175,969
    175,969
    175,969
Sales cost centre expense budget
    
    Sales Centre A
    Sales Centre B
    Sales Centre C
    Commissions
    $20,000
    $20,000
    $20,000
    Wages
    $100,000
    $100,000
    $100,000
    Telephone
    $3,000
    $3,000
    $3,000
    Office supplies
    $1,000
    $1,000
    $1,000
Contingency plan template
    Contingency Plan
Company name: Big Red Bicycle Pty Ltd
Person developing the plan:
Name:    Position:
    Risk identified:
    Strategies/activities to minimise the risk
    By when
    By whom
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
© 2015 Innovation and Business Industry Skills Council Ltd    1st edition version: 1
    Page 1 of 7
Answered Same Day Jul 01, 2020 BSBFIM501 Training.Gov.Au

Solution

Kuldeep answered on Jul 02 2020
142 Votes
Plan financial management approaches
Plan financial management approaches
Plan financial management approaches
Student Name
University Name
Contents
Introduction    3
Clarification of budget & negotiate changes    4
Basic accounting principles    5
Legislation & ATO requirements    5
Principles & techniques of managing budget items    6
Task A    6
Task B    9
Risk assessment    9
Contingency Plan Template    11
References    14
Introduction
The budget is a measure and set a parameter that works in a similar way to this measure or parameter. Budget preparation guides the operation of an organization. This is a method to check all the activities of managers and employees and report on differences. In the cu
ent scenario, the capability to plan the financial management methods and effectively manage resources is an essential element. It is an hourly need to categorize budget plans and negotiate changes with managers. In addition, risk identification plus budget analysis are necessary. After that, there is a need to develop a unique contingency plan to minimize and prevent the risk. The budget area is not just inaccurate, unclear, and impossible to achieve, there is a need to completely recognize as well as prove the same. Basic accounting principles are required to recognize changes as well as negotiate the changes as the manager. It is necessary to take care of its organizational requirements, policies, and procedures in an organization's financial management. In addition, the budget and the technology are also largely involved in making the budget.
        
    Purpose
    Identifying which changes should be made to achieve and clarify budget.
    Time
    01:30 PM
    Location
    
    Name of Sales manager
    Sam Gella
    Name of manager
    John Black
    Date
    4th July 2018
    Identify area of the budget that are not achievable, incu
ent or unclear
    Identified issues
    Proposed changes to the budget
    Rational for proposed change
    Consequence of not making relevant changes
    Strategy to achieve the target
    Authorised by
    Sales volume
    Due to the economic recession, the company's sales volume may be 20% lower than this fiscal year.
    The target for this financial year may be changed to 10% of sales.
    Company can accept 10% profit difference projects, which helps reduce the chances of influencing the company
    If company do not make any changes, the company will exceed the budget.
    The company will work hard to increase sales and revenue for the cu
ent fiscal year.
    Managing Director Tom Copeland
    Advertising
    Overcome advertising budgets and stop wasting money.
    Reducing advertising budget.
    The cost of advertising can be used for other purposes.
    Budget shortages and overcoming.
    Budget cuts and important expenses for using this budget
    Senior Accountant Pat Roberts
Clarification of budget & negotiate changes
Basic accounting principles
Cost principle: Principle of the cost is one of the important and basic principles of accounting moreover are called the historical principle. This principle refers to the company’s expenditure amount.
Complete Disclosure Principle: Company if follow with this principle provide the necessary financial information to get a clearer picture of who is using the information (Prawitz and Cohart, 2016).
Legislation & ATO requirements
Sales legislation:
a) 1954 Goods Sales Act
ATO requirements:
a) Pay consumption tax for each item sold
) Issue tax invoices
Legislative advertising:
a) "Company Law 2001"
ATO requirements:
Keep records:
a) Expense report
) Bank & other financial institution statements
c) Credit card statement
Principles & techniques of managing budget items
Be Conservative not optimistic: This budgeting principle is to avoid budgeting, as everything will go as expected. Trying to build a security factor tends to undervalue the income moreover overestimate all the expenses. There will forever be some unexpected events, so it is also a common strategy for budgeting.
Teamwork and consulting: Nowadays one most important principle of organization’s budgeting is the need for teamwork and negotiation. The work or task of the budgeting must be allocated to those who are most likely to know what expenditures may be needed and what is reasonably expected (Taylor, 2017).
Task A
In Task A, role played is the manager of the Sales Center A in the Adelaide. The center’s cost allocation indicates a commission of $20,000, a salary of $100,000, a telephone bill of $3,000, and an office supplies cost of $1,000. All total cost budgets show that the center costs $124,000. The center has a larger employee base and more sales staff. It sells other two centers and expects to easily sell more from the two centers.
Cost allocation needs to describe the demand and significance of the central sales volume, however in the...
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