A3 Task 3

School: University of Southern Queensland - Course: CIS MISC - Subject: Accounting

ASSESSMENT TASK 3 MONITOR AND CONTROL FINANCES-ROLE PLAY Trainer's Name: Student Names:Bhavik Patel Student ID: Assessment Due Date: Date of Submission: Declaration: I now sincerely affirm that the assessment work I present is all my own, with no parts copied from other individuals or writers without attribution to their publications. Signature:Date:

Assessment Task 3 BSBFIN501 Manage budgets and financial plans Task A A budget spread sheet is attached to the submission. Calculation of budget variances Budgeted. ($)Actual($)Absolutevariance ($)Percentage variance (%) Sales3,000,0002,400,00 0-600,000-20 Cost of goods sold400,000320,00080,00020 Direct Wages200,000100,000100,00050 Commission60,00060,00000 Gross profit2,340,0001,920,00 0420,00017.95 General & administrative expenses116,50058,25058,25050 Marketing expenses200,000200,00000 Employment expenses565,000600,000-35,000-6.19 Occupancy costs520,000550,000-30,000-5.77 EBIT938,500511,750426,75045.47 Income tax @25%234,625127937.5106,587.5045.47 Net profit after tax703,875383812.5320,062.5045.47 A Budget Variance Report Because of the changing economic condition, the sales variance is negative. This resulted in a 20 percent drop in business sales for the year. Indirect cost of sales decreased by 20% because of changes in sales volume. The sales commission was negotiated with the sales team to be 2.5 percent on sales rather than 2 percent, resulting in no fall in sales despite the decrease in sales. Because the 50% of direct labour was short-term contractors who were no longer required for the project, the direct salaries were lowered by 50%, resulting in a favourable variance. Because of 1

Assessment Task 3 BSBFIN501 Manage budgets and financial plans the 20% fall in sales, the gross margin also decreased, but at a slower pace of 17.95 percent. The nett profit dropped by 45 percent, but the predicted profits could only be cut by 10%. As a result, managers will need to take effective measures to increase efficiency and cut expenses. Big Red Bicycle's budget variance is calculated over four quarters. By subtracting the budget value from actual spending, the variance is calculated. When sales go below budget or expenses exceed budget, negative budget variance occurs. Both positive and negative variations are caused by events that are either internal or externally directed. The business benefited from a 50 percent reduction in general and administrative expenses. Employee costs rose significantly as full-time employees and salespeople wasted time and distracted other contractual workers. The training and reward program's objectives were not met. Because the advertisement fee is a set cost, there were no variances in marketing costs. Employees paid less attention to reducing the cost of wastage, raw materials, water, power, and paper, which resulted in higher occupancy costs. Employees are unsatisfied owing to a lack of participation and budget decision-making.