MF Learning activity 11_ Budget Monitor_Due Diligence 2024
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BSBFIN601 Manage organisational finances (Hospitality) 2024 SP1/2
Learning Activity 11: Revising the Budget
Learning activity: Revised budget
During one of Resort Hotel’s regular budget monitoring meetings with the CEO, accountant and department managers, the CEO advised that he would like to purchase a new car to replace the company car currently being used. This non-fuel efficient car costing $75,000 (excluding GST) will attract a luxury car tax which has not been allowed for in the budget figures. 11.1
Using the information from presentation and the ATO website, calculate the luxury car tax (LCT) applicable to this purchase.
LCT=(LCT VALUE-LCT THRESHOLD)*10/11*33%
=22500
11.2
Which budget would this information need to be incorporated into? Luxury car budget
Learning activity: Due diligence
During a recent meeting with the Resort Hotel accountant, a number of concerns were raised regarding the handling of funds and financial data. You decide to cp0mplete an audit to determine what other issues may be occurring within departments. You were already aware that many of the timesheets are not being authorised by the department manager, but also discover that general staff are authorising expenditure rather than the department manager which is a breach of the Financial Delegation Policy and potentially impact the results of the recently prepared budgets. 11.3
List below two additional actions that could be taken with department managers and staff to ensure compliance with the due diligence process. Enhance authorities’ limitation, ensure that the expenditure is applied correctly
Establish signature system to ensure the expenses are been monitored
Further reading:
FAQs on small business budgeting
http://www.flyingsolo.com.au/finance/financial-management/faqs-on-small-business-
budgeting
Business Victoria “Developing Good Financial Procedures’
http://www.business.vic.gov.au/#1007699
Internal controls for small business (2008 update). CPA Australia. Attribution to © 2011 Innovation and Business Industry Skills Council Ltd 1
st
edition version: Author: Paul Coulter Last Updated: 14 February 2024
Page 1
of 2
BSBFIN601 Manage organisational finances (Hospitality) 2024 SP1/2
http://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-
resources/business/internal-controls-for-small-business.pdf
Risk management and internal control. PWC. http://www.pwc.com.au/assurance/publications/audit-committee-guide/risk-
management-internal-controls.htm
Attribution to © 2011 Innovation and Business Industry Skills Council Ltd 1
st
edition version: Author: Paul Coulter Last Updated: 14 February 2024
Page 2
of 2
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N Question Completion Status:
A Moving to another question will save this response.
Question 11
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Jockie Music (2) ▼ BOT 12/05/2021
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* REVENUE
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[Current Date]
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1500
1000 1000
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G
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780
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The following data is available from the various functional budgets prepared at Nur Ika
Enterprise for the year 2022:
January
RM '000
February
RM '000
March
RM '000
April
RM 000
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128
84
72
90
Credit sales
640
1,140
880
760
800
Purchases for resale
Salaries and wages
Overhead expenses
560
520
320
266
280
238
248
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150
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140
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(1)
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(ii)
(iii)
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• Assume you are working on budgeting for the room department of your hotel.
• Assume the hotel’s ‘Room Revenue (Sales)’ was $1,640,000 during 2019. Based on the lodging forecast report, you expect the ‘Room Revenue (Sales)’ to increase by 3.7% next year.
• Assume the ‘Guest Supplies’ expenses (variable costs) from the room department was $246,000 during 2019. For 2020, this variable cost will remain at the same percentage of the Room Revenue (Sales) as experienced in 2019.
• Assume the ‘Salaries’ expenses (fixed costs) from the room department was $280,000 during 2019. For 2020, this fixed cost will increase by 2% due to the expected increase in living expenses in this area.
1. What will be the budgeted ‘Room Revenue (Sales)’ for 2020 ($)?
Note: The Answer field only accepts numbers. Thus, do not include $ or commas when you type your answer. Type your answer as a whole number (e.g., 200000).
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1.1 BUDGETED INCOME STATEMENT AND BUDGETED STATEMENT OF FINANCIAL POSITION
Benito Toma Corporation, maker of lambanog, is making its master budget for 2021.
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answer the questions below
The Operating Budget for 2021
1. The sales department budgeted
2. Merchandise inventory:
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2.500 units with a cost of P20.00 per unit.
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3. The Purchasing department projected the cost in 2021 to increase to P24.00 per unit.
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Below are the budgeted revenue and expenses for a restaurant for the year 2022.
RM ('000)
71,250
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Sales
Expenses
RM ('000)
28,500
Cost of supplies
Salaries
4,200
Wages
Depreciation
Repair and Maintenance
17,100
900
3,000
Advertisement
1,500
Laundry
Interest on Loan
200
2,200
Miscellaneous expenses
2,300
650
Utilities
Below are the additional information given to you for further analysis:
The expected pattern of sales for the year 2022 are as follows and it is the
company policy to analyse based on quarters.
Quarter
Percentage of sales
1
24
2
20
3
24
4
32
75% of the sales are on a cash basis and the balance will be received in the
next quarter.
The costs of supplies vary directly with sales and a constant stock value of
supplies are kept. 20% of purchases of the food and drinks are for cash and the
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80% of the repairs and maintenance item is for a major redecoration to be paid
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Completing a comprehensive budgeting problem—merchandising Company
Alliance Printing Supply of Baltimore has applied for a loan. Its bank has requested a budgeted income statement for April 2018 and a balance sheet at April 30, 2018. The March 31, 2018, balance sheet follows:
As Alliance Printing Supply’s controller, you have assembled the following additional information:
April dividends of $7,000 were declared and paid.
April capital expenditures of $16,300 budgeted for cash purchase of equipment.
April depreciation expense, $1,000.
Cost of goods sold, 40% of sales.
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April selling and administrative expenses include salaries of $37,000, 30% of which will be paid in cash and the remainder paid next month.
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Exercise 13-36 (Algo) Estimate Purchases and Cash Disbursements (LO 13-3, 4)
Eliot Sprinkler Systems produces equipment for lawn irrigation. One of the parts used in selected Eliot equipment is a specialty nozzle.
The budgeting team is now determining the purchase requirements and monthly cash disbursements for this part.
Eliot wishes to have in stock enough nozzles to use for the coming month. On August 1, the company has 17,900 nozzles in stock,
although the latest estimate for August production indicates a requirement for only 17,200 nozzles. Total uses of the nozzle are
expected to be 16.900 in September and 17,740 in October.
Nozzles are purchased at a wholesale price of $19. Eliot pays 25 percent of the purchase price in cash in the month when the parts are
delivered. The remaining 75 percent is paid in the following month. Eliot purchased 32,000 parts in July.
Required:
a. Estimate purchases of the nozzle (in units) for August and September.
b. Estimate the cash disbursements…
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2. What will be the budgeted ‘Guest Supplies’ expenses for 2020 ($)?
• Assume you are working on budgeting for the room department of your hotel.
• Assume the hotel’s ‘Room Revenue (Sales)’ was $1,640,000 during 2019. Based on the lodging forecast report, you expect the ‘Room Revenue (Sales)’ to increase by 3.7% next year.
• Assume the ‘Guest Supplies’ expenses (variable costs) from the room department was $246,000 during 2019. For 2020, this variable cost will remain at the same percentage of the Room Revenue (Sales) as experienced in 2019.
• Assume the ‘Salaries’ expenses (fixed costs) from the room department was $280,000 during 2019. For 2020, this fixed cost will increase by 2% due to the expected increase in living expenses in this area.
Note: The Answer field only accepts numbers. Thus, do not include $ or commas when you type your answer. Type your answer as a whole number (e.g., 200000).
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2. AP Sutton's Electronic Repair Shop has budgeted the following time and material
for 2020.
d
Sutton's Electronic Repair Shop
Budgeted Costs for the Year 2020
Time
Charges
Material
Loading Charges
Aatici,
Shop employees' wages and
benefits
$108,000
Parts manager's salary and
benefits
$25,400
-
Office employee's salary and
benefits
13,600
23,500
Overhead (supplies, depreciation,
advertising, utilities)
26,000
16,000
Total budgeted costs
Sutton's budgets 5,000 hours of repair time in 2020 and will bill a profit of $10 per
labor hour along with a 25% profit markup on the invoice cost of parts. The estimated
invoice cost for parts to be used is $100,00o.
$157,500
$55,000
ect
15
On January 5, 2020, Sutton's is asked to submit a price estimate to fix a 72-inch flat-
screen TV. Sutton's estimates that this job will consume 4 hours of labor and $200 in
parts.
Instructions
a.
Compute the labor rate for Sutton's Electronic Repair Shop for the year 2020.
b.
Compute the material loading charge…
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equired information
Skip to question
[The following information applies to the questions displayed below.]
Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows:
Endless Mountain Company
Balance Sheet
December 31, 2021
Assets
Current assets:
Cash
$
46,200
Accounts receivable (net)
260,000
Raw materials inventory (4,500 yards)
11,250
Finished goods inventory (1,500 units)
32,250
Total current assets
$
349,700
Plant and equipment:
Buildings and equipment
900,000
Accumulated depreciation
(292,000
)
Plant and equipment, net
608,000
Total assets
$
957,700
Liabilities and…
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- BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forwardBTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forwardBTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forward
- BTB (Pty) Limited is a distributor of PPE to rural health clinics in KZN. Turnover has been good and running expenses are under control, however the owner of the business, Mr Sam Jonas, is concerned that upcoming legal expenses and necessary vehicle repairs may negatively affect the business’ cash flow. He has hired you to prepare a cash budget for the next four months, from July to October 2022. All sales are made on credit and collected as follows: • 40% in the month of the sale; • 35% in the month after the sale; • 15% in the second month after the sale; • 10% will be written off as bad debts. All purchases are made on credit and paid for as follows: • 60% in the month of the purchase and • 40% in the month after the purchase. Total administration expenses (rent, rates stationary etc) will be R14 000 per month. The legal costs will be R34 000 in each of July and August 2022. Major repairs and maintenance to vehicles will cost R45 000 and this amount will be paid in three equal…arrow_forward1. Prepare A Budgeted Statement Of Cash flow? Analyze, Think, Communicate ATC 7-1 Business Applications Case Preparing and using pro forma statements Mary Helu and Jason Haynes rccently graduatcd from the same university. After graduation thcy decided not to scck jobs at cstablishcd organizations but, rather, to start thcir own small busincss hoping they could have morc flexibility in their personal livcs for a few ycars. Mary's family has opcrated Mexican restaurants and taco trucks for the past two gencrations, and Mary noticcd thcre were no taco truck Scrviccs in thc town where their university was located. To reduce the amount they would need for an initial investmcnt, they decided to start a busincss operating a taco cart rathcr than a taco truck, from which they would cook and scrve traditional Mexican-stylc strect food. They bought a used taco cart for $18,000. This cost, along with the cost for supplics to get startcd, a business license, and street vendor licensc brought their…arrow_forwardQ3: Fantastic Cement Manufacturing Company expects from you to calculate and present the master budget for the year 2020 from the following information? 1. Sales budget: Type 1 cement Br400, 000 Type 2 Cement Br600, 000 2. Production costs budget: Direct material cost 70% of sales Direct wages Br 50,000 3. Manufacturing overhead budget : Fixed manufacturing overhead Br 24,000 Variable manufacturing overhead Br 36,000 4. Total Operating expenses budget Br 30,000 Required: prepare a Master Budget for Fantastic Company for Year 2020 and show the expected net profit by considering the above data onlyarrow_forward
- N Question Completion Status: A Moving to another question will save this response. Question 11 Which of the following would not be used in preparing a cash budget for January 2022? O beginning cash balance on January 1 O budgeted salaries expense for January O estimated depreciation expense for January O budgeted sales and collections for January Moving to another question will save this response. Jockie Music (2) ▼ BOT 12/05/2021arrow_forwardThe Chapter 8 Form worksheet is to be used to create your own worksheet version of the Review Problem in the text. Requirement 2: The company has just hired a new marketing manager who insists that unit sales can be dramatically increased by dropping the selling price from $8 to $7. The marketing manager would like to use the following projections in the budget: a. What are the total expected cash collections for the year under this revised budget? b. What is the total required production for the year under this revised budget? c. What is the total cost of raw materials to be purchased for the year under this revised budget? d. What are the total expected cash disbursements for raw materials for the year under this revised budget? e. After seeing this revised budget, the production manager cautioned that due to the current production constraint, a complex milling machine, the plant can produce no more than 90,000 units in any one quarter. Is this a potential problem?arrow_forwardExercise 13-47 (Algo) Sensitivity Analysis (LO 13-9) Sanjana's Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and the economy in addition to new competition. Sanjana Sweet, the owner, prepares a budget each year after reading long-term weather forecasts and estimates of summer tourism. The budget is a first step in planning whether she will need any loans and whether she needs to consider adjustments to store staffing. Based on expertise and experience, she develops the following. Gross Margin per customer (Price - Cost of Goods) $6.5 5.5 1.9 Number of Scenario Good Fair customers 45, 000 35, 000 30, 000 Poor Sanjana assumes, for simplicity, that the gross margin and the estimated number of customers are independent. Thus, she has nine possible scenarios. In addition to the cost of the products sold, Sanjana estimates staffing costs to be $45,000 plus $2 for every…arrow_forward
- Create the six-month budget as shown below for Web Wonders, a new company that provides Internet users with quick and easy access to the World Wide Web. Save the budget as Web Wonders Budget, then answer the following questions. * REVENUE 7 Internet Subscriptions s Homepage Server Space Total Revenue Web Wonders Proposed Six-Month Budget: January to June 2019 [Current Date] 11 EXPENSES $ 12 Salaries 23 Rent 14 Equipment Leases 15 Advertising 16 Operating Costs Total Expenses 39 19 PROFIT NNN www January February March April May June Totals 4500 150 4500 7000 7000 1500 1000 1000 150 G 3500 3500 3500 2500 2500 1200 3500 780 780 780 Bingka 1. In January you estimate that 1000 Internet subscribers will join Web Wonders at a cost of P30 per subscriber. You project that the subscription revenue generated in January will increase 5% in February, 10% in March, then 20% for each of the remaining months. Calculate all increases based on January revenue. What is the total revenue in cell H9? 2.…arrow_forwardRequired information Skip to question [The following information applies to the questions displayed below.] Endless Mountain Company manufactures a single product that is popular with outdoor recreation enthusiasts. The company sells its product to retailers throughout the northeastern quadrant of the United States. It is in the process of creating a master budget for 2022 and reports a balance sheet at December 31, 2021 as follows: Endless Mountain Company Balance Sheet December 31, 2021 Assets Current assets: Cash $ 46,200 Accounts receivable (net) 260,000 Raw materials inventory (4,500 yards) 11,250 Finished goods inventory (1,500 units) 32,250 Total current assets $ 349,700 Plant and equipment: Buildings and equipment 900,000 Accumulated depreciation (292,000 ) Plant and equipment, net 608,000 Total assets $ 957,700 Liabilities and…arrow_forwardQuestion 1Ming Chung Limited is applying for additional bank overdraft finance to enable thecompany to make the plant and machinery purchase described below. The directorshave has asked you to draw up a cash budget for the 6 months to 30 June 2020 toprove to the bank that that overdraft finance will be repaid by 30 June 2020. Thecompany provides you with the following financial information:Month Sales Purchases Wages Overheads£ £ £ £November 2019 (actual) 45,800 18,400 9,600 6,000December 2019 (actual) 34,600 13,900 9,800 14,000January 2020 (budgeted) 42,200 16,800 10,500 7,000February 2020 (budgeted) 44,000 17,600 11,200 7,500March 2020 (budgeted) 54,000 21,600 13,500 18,800April 2020 (budgeted) 57,600 23,000 14,400 8,000May 2020 (budgeted) 61,800 24,700 15,300 9,200June 2020 (budgeted) 63,700 25,500 15,900 9,800Notes♦ The bank balance at 1 January 2020 is expected to be £25,000.♦ 60% of sales are for cash with the other 40% being on credit. 70% of creditsales pay in the month…arrow_forward
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