SIT40516 - Certificate IV in Commercial Cookery

SIT40516 - Certificate IV in Commercial Cookery

Full Name: ANTHONY SAI BELLAMKONDA

Student ID: ANIE200136
FINANCE -MANAGE BUDGETS

SITXFIN003 – Manage finances within a budget
SITXFIN004- Prepare and monitor budgets
STUDENT ASSESSMENT ANSWER BOOKLET
Assessment Task 1- Written Questions
QUESTION 1
Provide an outline of what a master budget is and what it contains.
ANSWER:
Master budget is an overall combined budget made up of the company's individual budget. It is
designed to present a complete picture of the company's financial activity and health. Master
budget combines factors such as sales, operating expenses. Assets and income stream to
allow companies to establish goals and evaluate their overall performance. As well as that of
individual performance within the organization.
QUESTION 2
Identify the four basic financial reports and outline their purpose and content.
ANSWER:
Financial Outline Content

reports
Balance The balance sheet presents a company's Assets

statement financial position at the end of a specified Liabilities
date. The balance sheet is a ‘snapshot’ of the
company's financial position at a point in Owners equity
time.
Income generate a trial balance report, calculate It shows the expenses, the
statement your revenue, determine the cost of goods revenue gains, losses. It doesn't
sold, calculate the gross margin, include show cash receipts.
operating expenses, calculate your income,
include income taxes, calculate net income
and lastly finalize your income statement
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Finance-Managing Budgets- SITXFIN003- SITXFIN004
with business details.
statement of shows all of the changes to the various Eliminate their net profit or loss
changes in stockholders, Equity account during the during the accounting period.
equity same period.
Statement of The cash generated and used during the shows the cash changes in current
the cash flow time interval specified. assets, Current liabilities changes
in long term asset and long term
liabilities
STION 3
Provide a brief summary of the purpose of each of the following budgets:
Cash budget details a company's cash inflow and outflow during a

 Cash/Cash specified budget period, such as a month, quarter or year. Its
flow budget primary purpose is to provide the status of the company's cash position
at any point of time.
 Departmental departmental budget is a department-level financial plan that lays

budget out spending for the upcoming quarter or fiscal year. Managing a budget for
your department is similar to managing a household budget—well.
 Event budget crucial step during the planning phase, right after setting
your goals and objectives. A budget is a detailed forecast of what will be
happening financially at your event. It helps control your expenses and
revenues, and measures the success of your meeting or event performance.
 Project The Project Budget is a tool used by project managers to estimate the total

budget cost of a project. A project budget template includes a detailed estimate of all
costs that are likely to be incurred before the project is completed.
 Purchasing A purchases budget is created to keep track of the company's inventory value
budget and the amount of goods sold. It also is used to help you keep track of your
desired ending inventory value each month.
 Sales budget The purpose of sales budget is to achieve the objectives of the sales
department. It also acts as a planning tool. It helps a firm to set standards and
strive to achieve them. It is also an instrument of coordination between
different departments in an organization like sales, finance, production and
advertising.
 Wage Having an accurate wage budget can help you with one of the greatest and
budget. most important expenses of your business—paying employees. Be sure to
consider wages, taxes, benefits, and other expenses. Also, break it out by
month to account for changes in labour hours, bonus months, and other
seasonal expenses
QUESTION 4
Identify the purpose of the following financial records:
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A deposit slip is a small paper form that a bank customer includes when depositing funds into
Bank deposit a bank account. The deposit slip serves as proof that the bnk acknowledged receiving the funds
documentation from the customer.
Bank statements bank statement is also referred to as an account statement. It shows if the bank is accountable
with an account holder's money. Bank statements are a great tool to help account holders keep
track of their money. They can help account holders track their finances, identify errors, and
recognize spending habits.
Banking summaries The bank account summary shows the up-to-date position of your finances in the business
represented by cash in the bank, credit cards, loans and petty cash. The bank accounts are
grouped into two sections, Make a transfer between bank accounts.
Business Activity The business activity statement (BAS) is a form submitted to the Australian Taxation Office (ATO)
Statements by registered business entities to report their tax obligations, including GST, pay as you go
withholding (PAYGW), pay as you go instalments (PAYGI), fringe benefits tax (FBT), wine
equalisation tax (WET) and luxury car.
Cheque books cheque book is a book of cheques which your bank gives you so that you can pay for things
by cheque. Leave your cheque book and credit cards at home unless you know you will need
them.
Credit card A billing statement is a periodic statement that lists all the purchases, payments and other
transaction debits and credits made to your credit card account within the billing cycle. ... At the very least,
statements review your balance, minimum payment, and the list of transactions made to your account.
Journal entries A journal is a record of transactions listed as they occur that shows the specific accounts affected
by the transaction. They provide important information that are used by auditors to analyse how
financial transactions impact a business.
Labour and wages Information about personal income and the wages and salaries paid to employees is used for
reports many purposes including economic analysis, social research, policy formation and evaluation,
and research by employer and employee associations
Merchant The purpose of a merchant account statement is to understand your incomes and costs and

statements analyse how much are your base costs and mark-ups and how you can lower them and stay
competitive.
Merchant The Merchant Account Summary Report provides the total number of transactions and total

summaries amounts processed for each Gateway Account associated with your Merchant Accounts and for
each type of credit card within each Gateway Account. This report is accessed from the
Transaction Reports in Data Management.
Transaction reports. transaction report is data submitted to us which contains information relating to a transaction.
We use the reports to detect and investigate suspected market abuse. They may also be used for
conduct supervision purposes and to support the work of other regulatory authorities
QUESTION 5
What are the requirements for a tax invoice in Australia?
ANSWER: www.ato.gov.au
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First thing if the tax invoices for taxable piece sales of less than $1000, must include enough
information to clearly to determine the following details.
 Suppliers, your business, identity;
 Name and Address and ABN
 Must say “Tax Invoice”
 Invoice Number
 Date of transaction
 Brief description of what is sold, or item number, including quantity sold
 Sale price or amount paid
 GST component, if applicable. Where applicable: “total price includes GST”
 Due date for payment/ terms of payment
 Method of payment, including bank account details.
QUESTION 6
Research three common accounting software applications that small businesses use and summarise
their functions and features.
ANSWER: The function the features so you have to look for example, QuickBooks, Xero or
Reckon or MYOB.
Quick books:
you are looking for a business accounting solution, there are many reasons why QuickBooks deserves
to be your first choice. This software comes in different versions such as QuickBooks Pro, Premier,
Enterprise, and Accountant.
Specific to your business accounting needs, QuickBooks has a solution. But which version will be best
suited for your business? Knowing this is very important before you make the required choice.
This version of QuickBooks is considered one of the most comprehensive financial management
solutions for small and mid-sized businesses, as well as enterprises. Simply put, if you want more
than five and up to thirty users to work on the software at the same time, QuickBooks Enterprise is
what you need.
Before moving on to the specific business users of QuickBooks Enterprise, let’s know more about this
software in brief.
Features of QuickBooks:
Ease of Managing Reports and Finances
Quick and Easy Inventory Management
Easy to Define User Roles and Permissions
Reckon :
The base software includes the following functions and features:
 See cash flow in real-time.

 Unlimited bank reconciliations.
 Budgeting, GST & BAS reports.
 Free 24/7 Reckon support.
 Multi-layered data security and SSL encryption.
 Automatic data backups.
 Share your data with your accountant or bookkeeper.
 20+ reports to generate.
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Xero’s features are:
 Budgeting and financial reporting.
 Fixed assets.
 Sales tax.
 Purchase orders.
 Sales quotes.
 Multi-currency.
 File storage.
 Contacts and smart lists for customer relationship management
QUESTION 7
Describe three techniques commonly used for making estimates of expense budgets.
ANSWER:
estimates of budget could be,
Percentage of sales.
Estimate cost. Based on previous data Projection based on quotation.
Factoring in applicable internal factors.
analysis by time period that is Weekly, monthly or quarterly.
All factoring and inapplicable external factors such as competition, interest rate, state of the
economy.
QUESTION 8
Identify and outline the steps in the accounting cycle.
ANSWER:
The eight steps of the accounting cycle include the following:
1. Step 1: Identify Transactions.
2. Step 2: Record Transactions in a Journal.
3. Step 3: Posting.
4. Step 4: Unadjusted Trial Balance.
5. Step 5: Worksheet.
6. Step 6: Adjusting Journal Entries.
7. Step 7: Financial Statements.
8. Step 8: Closing the Books.
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.
ANSWER:
first one will be high volume of workplace accidents indicating need to increase training and
Need to replace faulty and dangerous equipment
would be staff unrest or absenteeism, where workers are unhappy with the wages they are
receiving.
No well feedback.
Producing are not up to standard or in it can be dangerous or defective.
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would be a lack of fund for working capital that indicates need to refinance.
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.
ANSWER:
usually minus sign
in bracket.
in red.
QUESTION 11
Discuss the role of a budget and financial reports for a business.
ANSWER:
a budget and financial report for business would be budgets or common financial tools used to
manage and control a company's finances. A budget usually has forecasted expenditure and
income and then itemized actuals across the calendar or fiscal year.
The purpose of a budget is to help a business make decision Control cost and hence profitability
or monitor performance and identify they are making profits or not.
a budget actually is like a controlling or To monitor and guide if you're on the right track.
Financial reports are also produced to meet legal and compliance
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.
ANSWER: changes to the Fair Work Act and the National Employment Standard impacting on
payrolls on public Holidays and weekends And dismissals local blows the hospitality award,
Changes in wages act, changes in equal work opportunity act. Changes in safety and standards
of food, changes in work health and safety.
QUESTION 13
Discuss how a hospitality business might manage and recover their profit margin in a downturn in the
economy.
ANSWER:
 Create a strategy partnership.
 Compete with competitors.
 loyalty program
 Additional revenue
 Additional market
 Unbundle
 Discount rates
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QUESTION 14
Identify five internal sources of information that may be used as a basis for preparing a budget and
forecasting income and expenditure.
ANSWER:
sales figure from the same period last year
Forecasting, and organizational guideline for budget preparation.
expenditure information from previous period. Financial commitments such as loan rent and
lease payment, overhead, labour.
QUESTION 15
Identify five external sources of information that may be used as a basis for preparing a budget and
forecasting income and expenditure.
ANSWER:
 the research on competitors.
 do market research
 customer research.
 financial proposals from stakeholders.
 Grand funding
 Government legislations.
 statistical information.
QUESTION 16
Identify and briefly summarise the four stages of a budget cycle.
ANSWER:
The budget cycle consists of four phases
(1) preparation and submission
Review the assumptions about the company's business environment that were used as the basis for the
last budget, and update as necessary. Determine the capacity level of the primary bottleneck that is
constraining the company from generating further sales, and define how this will impact any additional
company revenue growth. Determine the most likely amount of funding that will be available during the
budget period, which may limit growth plans. Determine whether any step costs will be incurred during
the likely range of business activity in the upcoming budget period, and define the amount of these costs
and at what activity levels they will be incurred
(2) approval of the budget
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The budget approval is a process when annual estimates of public revenues and expenditure made by
governments (executive branch of power) acquire a status of a legal act after discussion and voting in
parliaments (or similar elected institutions)
(3) execution of the budget

The budget execution process generally follows five steps: Monies are released to various line
ministries (or departments/agencies) as per the approved budget. Agencies initiate expenditures
directly or by procuring goods and services. Payments are made for these expenditures .
4) audit and evaluation of the budget.

Budget evaluation refers to the final stage of the budget cycle when there is an assessment of
whether public resources have been used appropriately and effectively. CSOs can engage in and
strengthen the Budget Evaluation process using the following methods: Audit Analysis and
Engagement » Impact Analysis »
QUESTION 17
a) Define the following options and approaches to budgeting:
 Incremental budgeting
ANSWER:
Incremental budgeting is the traditional budgeting method whereby the budget is prepared by
taking the current period's budget or actual performance as a base, with incremental amounts
then being added for the new budget period. The current year's budget or actual performance is a
starting point only.
 Zero-based budgeting.
ANSWER: Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be
justified for each new period. Budgets are then built around what is needed for the upcoming
period, regardless of whether each budget is higher or lower than the previous one.
b) Why are ‘rolling budgets’ useful in the hospitality industry?

ANSWER: A rolling forecast allows a company to respond quickly and manage resources
according to changing economic needs. More and more businesses are
embracing rolling forecasting. Hotel companies, both small and large, are embracing the
possibility of introducing a dynamic management model to get more out of their business.
An advantage of the rolling budget philosophy is that it recognizes the difficulty of anticipating
what the business environment will be one year from now. The small-business owner adjusts his
forecast during the year in response to changes in the business environment.
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 From they have better knowledge It does not integrate information
down owners to Where business is to go or the from frontline customer contact staff.
lower level goal of the business. It does not reinforce them in use. It
Enables quick budget doesn’t encourage cooperation from
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preparation others.
Bottom From Lower Advantage is that people that It reinforces us to Know them. other
up level to know what they're doing so lower rank staff member to
owners they have better knowledge. participate war management.
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.
ANSWER: Here are some factors that need to be considered for
 stock levels.
 Conversion financial return
 Current Industry Conditions.
 Budget is cash flow
 Equipping see rates and finish working.
 Performance of particular Department or service.
 Sales performance sales return.
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.
ANSWER:
Measure food waste.
Predict food orders
Engage staff.
Practise good stock control
Keep an eye on overproduction.
QUESTION 21
Explain what yield management is in relation to a hotel. Why is yield management important?
ANSWER:
Hotel Yield Management involves selling the right room to the right customer at the right time. Since
competitor price, customer preferences, budgets and demand levels keep changing, a variable
pricing strategy also called as dynamic pricing is used to tweak room rates in accordance with the
said factors
Yield management is a pricing strategy and a function of the supply and demand economy. It's
particularly important and useful in the hospitality industry. This reduces the likelihood of
lost revenue and can help hospitality businesses manage their product and revenue streams, even
when demand varies
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 Forecast Average Operating Forecasted room revenue

rooms occupancy Room Rate Days p/year (sales)
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available
Example: 122 75% $105 365 $3,506,737
50 62% $90 310 62%of 50=31×90×310=$864900
15 98% $86 365 98%of15×86×365=461433$
300 89% $220 365 89%of300×220×365=21440100$
QUESTION 23
Working out how much to charge for food and drink.
a) Calculate the cost of a drink of vodka and soda (before taxes):
 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 $0.36 work out the cost of the soda
water, slice of lime and one straw.
 What is the cost of the drink (ingredients only)?
 If you wanted to make 500% on the drink how much would it be?
 ANSWER: The cost of the drink is 2.42$
If 500% profit is needed then it would be 12.1$
b) What other costs may you have to calculate into the cost of this drink? List three suggestions.
ANSWER:
For service charges

For making charges
Production costs
c) If half of the bag of limes were thrown out after being cut and not used, what is the cost of the
waste?
ANSWER:
If the half of the likes were thrown , wastage would be 1$
QUESTION 24
What are the three different ways that a statistical/financial report can show variances?
ANSWER:
 Cost Variances.
 Material Variances.
 Labor Variances.
 Overhead (Variable) Variance.
 Fixed Overhead Variance.
 Sales Variance.
 Profit Variance.
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Assessment Task 2- Case-Study
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
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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.
ANS:
 Calculate the percentage deviations for room sales, food sales, liquor sales, wages, rent and
overheads.
ANS:
 Indicate if the identified deviations are positive or negative.

ANS:
ITEMS PROJECTED ACTUAL DEVIATION % OF POSITIVE OR

FIGURE DEVIATION NEGATIVE
ROOM 20,000,000 12,000,000 (8,000,000) 40% NEGATIVE

SALES
FOOD SALES 5,000,000 9,000,000 4,000,000 80% POSITIVE
LIQUOR 3,000,000 5,000,000 2,000,000 66% POSITIVE
WAGES 2,100,000 2,500,000 4,000,000 16% NEGATIVE
RENT 1,000,000 1,200,000 2,000,000 20% NEGATIVE
OVERHEADS 500,000 450,000 50,000 10% POSITIVE
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.
ANS:
 Calculate the dollar deviations for sales on a month-by-month basis.

ANS:
 Calculate the percentage deviations for sales on a month-by-month basis.

ANS:
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 Calculate year-to-date budgeted totals for sales on a month-by-month basis.
ANS:
 Calculate year-to-date actual totals for sales on a month-by-month basis.

ANS:
 Calculate the dollar deviations for YTD figures on a month-by-month basis.

ANS:
 Calculate the percentage deviations for YTD figures on a month-by-month basis.

ANS:
MONTH BUDGET ACTUAL $ % YTD YTD +/- & % +/-

$ DEVIATION DEVIATION BUDGETING ACTUAL
JULY 50,000 49,300 (700) (1.4%) 50,000 49,300 -700 -1.4%
AUGUST 54,000 56970 2970 5.5% 1,04,000 1,06,270 2,270 2.18%
SEPTEMBER 58,000 66,160 8160 14.07% 1,62,000 1,72,430 10,430 6.43%
OCTOBER 62,000 65,500 3500 5.64% 2,24,000 237,930 13,930 6.21%
NOVEMBER 66,000 67,570 1570 2.37% 2,90,000 3,05,930 15,500 5.34%
DECEMBER 70,000 69,040 (960) (1.39%) 360,000 3,73,070 13,070 3.63%
QUESTION 3
For Property 1 suggest four possible causes for the variation in room sales.
ANS:
1. Reviews and feeds
2. Promotion run by competitors at same time
3. Poor hygiene
4. Bad customer service
5. Economic downturn
QUESTION 4
For Property 1 suggest four possible ways to manage the variation in room sales.
ANS:
1. Increase promotional activities
2. Refurbish rooms
3. Improve customer service
4. Adjust your budget
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5. Revise room rates to be more competitive
6. Bundle with breakfast and dinner
QUESTION 5
Identify four possible causes of the results for food sales in Property 1.
ANS:
1. Good chef
2. Good customer service
3. Changes in food menu style
4. Good hygiene
5. New well trained kitchen staff
QUESTION 6
There is no need for you to investigate the ‘wages’ deviance: why might this be so?
ANS:
1. If deviation is less than 20%
2. Pay rise based on industry agreement
3. Maybe management hiked the wages by 15%
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?
ANS:
1. Change advertisement strategies and switch to direct marketing
2. Change the mode of advertisement like Tv and radio and online
3. Change the menu
4. Revise the standards of the menu
QUESTION 8
Why would you want to conduct a major investigation into sales for September?
ANS: because sales were in September has a drastic change and huge profit, under investigation
only we can find out how they managed to bring that much sales.
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?
ANS:
review Their budget
Feedback
How they prepared food
Promotional offers
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How they manage the kitchen
Any difference in ambiance
QUESTION 10
How might you research internal factors impacting the figures you have been given? Give three
suggestions.
ANS:
talk to all staff
Talk to all customers and ask them feed back
Observe and monitor
Preparation and operation
Review the customer feedback
QUESTION 11
What could you do to research external factors impacting the figures you have been given? Give five
suggestions.
ANS: talk to operates of the venues
Speak with official from government agencies.
Speak with industry body hotel, motel, restaurant association.
Monitor media and listen news.
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.
ANS:
reservations
Statement of purchase orders
Check staff, wages, rosters
Pretty cash book
QUESTION 13
Which colleagues and managers might you need to share these findings with? Give five suggestions.
ANS:
The owners
The Managers
The senior level
Executive management
Board members
Departmental managers
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Joint venture parties
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?
ANS:
Customer waiting time will increase.
Customer service gets affected
Work load of staff will be overload
Quality of service will be decreased.
Assessment Task 2- Case-Study

Assessment Task 3 – Financial and Statistical Calculations
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
ANS: cost of goods good sold =30,000-25000+125,000=1,30,000
QUESTION 2
What is the Percentage Cost Factor for the following?
 Cost of Goods Sold: $17,800
 Revenue: $41,786.
ANS:
Percentage cost factor =17,800/41786×100=42.6%
QUESTION 3
What is the Gross Profit for the following?
 Revenue: $134,000
ANS: gross profit= 134,000-55962=78038
QUESTION 4
Calculate Percentage Mark-Up for the following:
 Revenue: $15,000
ANS:
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PERCENTAGE MARK-UP = 15000-6934= 8066 ÷6934×100=116%
QUESTION 5
What is the Return on Proprietor’s Funds given the following?
 Owner’s funds: $1,200,000
 Nett profit: $365,500
ANS: return = 3,65000/1200,000×100= 30.1%
QUESTION 6
Calculate Current Asset Turnover Ratio (expressed as a percentage) from the following:
 Average current assets: $2,000,000
 Sales: $350,680
ANS: current asset turnover ratio = 350,680/2,000,000=1.75
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
ANS:
Gearing ratio= 450,999/2,150,000=0.20
QUESTION 8
Calculate the Working Capital Ratio for the following:
 Current assets: $805,000
 Current liabilities: $1,450,000
 ANS:
Working capital ratio = 805,000/1450000=0.55
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
ANS:
Quick asset ratio = 2,000,000-55000/1,300,000-45000= 1.54
QUESTION 10
What is the Proprietary Ratio (expressed as a percentage) given the following?
 Total proprietorship: $375,000
 Total assets: $1,500,000
ANS:
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Proprietary ratio = 3,75,000/1,500,000= 0.25
QUESTION 11
Calculate the gross profit margin percentage for the figures below:
 Sales: $ 2,457,983
 Gross profit: $890,816
ANS:
Gross profit margin percentage= 890,816/2,47,983×100=3.59
QUESTION 12
Calculate room occupancy percentage from the following:
 Total rooms available: 1205
 Rooms occupied: 378
ANS:
Occupancy percentage= 378/1205×100=31.36%
QUESTION 13
What is the average room rate for the following?
 Room revenue: $66,450
 Total rooms available: 524
ANS: average room rate = 66540/524= 126$
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 Short term
Proprietary ratio Long term
Working capital ratio Short term
Interest coverage Long term
QUESTION 15
If your working capital ratio went from 2 to 1, would that generally be seen as a positive or negative
movement?
ANS: negative impact
QUESTION 16
Your gearing ratio has moved from 0.5 to 1.0: is that generally regarded as a Positive or Negative
movement?
ANS: negative impact
QUESTION 17
Your analysis of labour costs indicates negative deviations: what might you suggest to improve this
situation?
Page 18 of 32
ANS:
Provide employees with predictable work schedules.
Reduce pay overages.
Reduce labor costs by optimizing schedules.
Reduce employee turnover and increase productivity.
Incentivize performance
Assessment Task 4: Project
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 short
order cook and you pay a casual cleaner. As part of the onsite manager’s role, you and your partner
complete the general housekeeping duties when it is quiet.
It is budget preparation time and Betsy has asked you to meet with her to discuss the details.
Betsy has provided you with last year’s actual revenue received, broken down into accommodation, food and
beverages.
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
Page 19 of 32
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:
What budget you are responsible for.
ANS:
The increases Betsy has directed you to include into the projected income budget for the next
year.
 Accommodation
ANS: 5% increase across the board of last year
 Food prices
5% increase on last year
ANS:
 Beverage prices.
ANS: 10% increase on last year.
Betsy will also give you some extra considerations during your meeting. Make note of them:
A sales campaign designed to attract people to the B&B for a relaxing weekend, to escape the
hustle and bustle of city life will be rolled out over January, February and March and you (the
assessor in the role of Betsy) have calculated that this should increase sales by 10% across
those three months for accommodation, food and beverage sales. This 10% should be
calculated on the increased price. (January income $8800 x 5% increase = $9240 + 10% =
$10,164).
1. 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.
Page 20 of 32
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.
Page 21 of 32
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.
2. 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.
ANS: Email to Betsy:
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.
ANS:
Page 22 of 32
BUDGET:
Account name Total July16 Aug Sep16 Oct16 Nov16 Dec16 Jan16 Feb16 Mar16 April May June16
sales 16 16 16
Accommodation 58,527 3150 2940 2940 3780 3990 6300 10,164 10,164 4389 3780 3570 3360
Food 35,196 1680 1890 1890 2520 3150 3990 4389 4620 3927 2730 2520 1890
Beverages 20,664 1638 1680 1995 1890 2058 1785 1848 1848 1617 1260 1470 1575
Total income 114,387 6468 6468 6825 8190 9128 12075 16401 16632 9933 7770 7560 6825
Less cost of
sales
Stock 22,344 1327 1428 1554 1764 2083 2310 2495 2587 2218 1596 1596 3360
Gross profit 5141 5082 5271 6426 7115 9765 13906 14045 7715 6174 5964 1890
Less expenses
Over head 2,000 2000
Advertising 2,400 200 200 200 200 200 200 200 200 200 200 200 200
Laundry 9,600 800 800 800 800 800 800 800 800 800 800 800 800
Electricity 9,600 2200 2000 2400 3000
Insurance 1,400 700 700
Property lease 18,000 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
Linen and 2,000 2000 3000
towels
Kitchenware 1,000 1000
Repairs and 4800 400 400 400 400 400 400 400 400 400 400 400 400
maintenance
Miscellaneous 7,200 600 600 600 600 600 600 600 600 600 600 600 600
Wages and 28,598 1617 1628 1706 2048 2300 3019 4100 4158 2483 1943 1890 1706
salaries
Total expenses 5117 7128 8106 5548 5800 11519 7600 7658 9083 5443 5390 8206
Operation profit 5,445 24 (2046) (2835) 878 1315 (1754) 6306 6387 (1368) 731 574 2767
Page 23 of 32
or loss
Page 24 of 32
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.
ANS:
Bundling the accommodation
Package with meals
Suggest a new menu
Increase the cost of accommodation
Building and give a better deal
Page 25 of 32
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.
ANS: the four recommendations to give to reduce the cost
Frozen berries
Frozen black berries
Goat cheese
Decrease the number of eggs
Sparking wine
Breads used for other purpose also.
Page 26 of 32
1. 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.
ANS:
To assessor
Some of berries replaced by Frozen berries
Frozen black berries
Expensive cheese to replace with Goat cheese
Decrease the number of eggs
Sparking wine
Breads used for other purpose
These are the eliminating in efficiency, identify manual paper based systems that could be
computerized. Avoid over specifying such as high quality components for low quality product.
Carefully checking supplier invoices for over charging, common examples are double billing incorrect
charges
PART D
It is September and the budget is as follows:
July July August August
Budget Actuals Budget 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
Page 27 of 32
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.
ANS:
Communication Report:
INCOME July August

Accommodation 5020 3670
Food 1820 2040
Beverages 1680 1896
TOTAL REVENUE 8520 7606
EXPENSES
Overhead
Stock 2100 2300
Lease 1500 1500
Repairs/maintenance 600 300
Advertising 200 200
Laundry 1000 950
Wages 1532 1450
Miscellaneous 560 400
TOTAL EXPEND. 7492 7100
As the manager you have been trying to cut costs in wages by doing the housekeeping yourself during the
week and on Saturdays. While you have made savings you have run yourself into the ground and are
exhausted. It has also meant that customer service has suffered because you are running from the office to
the cabins during the two to three hour cleaning window while customers wait. Sales have been up with
accommodation running at 92% occupancy over the past four months. You want to bring the casual
housekeeper back in for 7 days per week. This will add approx. $4000 to your monthly expenditure.
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
1. 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.
Page 28 of 32
2.
ANS:
Memo to Betsy:
To Betsy
CEO
I have seen many changes in budget and due to rigorous efforts and lot of meetings conducted
with suppliers to decrease the cost. I am totally satisfied with that to bring profit and some I
must recommend to decrease the cost would be
Optimize labor scheduling and staff training.
Attend to utilities.
Stay on top of maintenance.
Improve the employee onboarding experience.
Take advantage of technology to automate processes.
Streamline F&B to reduce waste.
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
Page 29 of 32
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.
September September October October

Budget Actuals Budget Actuals
INCOME
Accommodation 2,940 2,028 3,780 2100
Food 1,890 1,228 2,520 1870
Beverages 1,995 1,296 1,890 600
TOTAL REVENUE 6,825 4,552 8,190 4570
EXPENSES
Overhead 0 0 0 0
Stock 1,554 1,180 1,764 1200
Lease 1,500 1,500 1,500 1,500
Insurance 700 700 0 0
Repairs/maintenance 400 380 400 400
Advertising 200 200 200 200
Electricity 2,200 2,200 0 0
Laundry 800 500 800 700
Wages 1,706 3,300 2,048 2,800
Miscellaneous 600 290 600 700
TOTAL EXPEND. 9,660 10,250 7,312 11800
+/- -2,835 -5,698 878 -7230

Cash on hand: start 9,978 11,534 7,143 5836
Cash on hand: end 7,143 5,836 8,021 1394
1: Use the information above to update the budget in the blank cells.
Page 30 of 32
2: 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.
ANS:
Cash Flow Report:
There are only two ways to reduce a budget deficit. You must either increase revenue or decrease
spending. On a personal level, you can increase revenue by getting a raise, finding a better job, or
working two jobs. You can also start a business on the side, draw down investment income, or rent
out real estate.
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.
ANS: tourism association
Local industry network
Local council
Approach construction companies
2. Identify at least three solutions for the income slump. The solutions should concentrate on
increasing income and revenue rather than on reducing expenses.
ANS: Design new packages target long-term stay, or repeat visit offer, loyalty programs offering
point on accommodation, offer food beverage vouchers, or offer, additional facilities like
transportation to the events new advertisement campaign, market research, offering food and
beverage to walk in customers. Lunch and dinner packages for the in accommodation customers,
speak to local suppliers and ask for better rates on fresh produce, to help you keep giving them
business.
Page 31 of 32
3. 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.
ANS:
Memo to Betsy:
To assessor
These are the recommendations
1. Chef: Order the frozen products where ever possible.
2. Order Pre-made products to reduce the wages cost as it will help you roster less staff.
3. Bulk ordering for dry goods and frozen products.
4. Follow bulk production to utilise the extra produce ordered before it spoils or expires to
increase the shelf life.
5. freeze the bulk cooked food to extend the usage. Use convenience products.
Page 32 of 32

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SIT40516 - Certificate IV in Commercial Cookery

Full Name: ANTHONY SAI BELLAMKONDA

FINANCE -MANAGE BUDGETS

STUDENT ASSESSMENT ANSWER BOOKLET

Assessment Task 1- Written Questions

Financial Outline Content

Balance The balance sheet presents a company's Assets

Cash budget details a company's cash inflow and outflow during a

 Departmental departmental budget is a department-level financial plan that lays

 Project The Project Budget is a tool used by project managers to estimate the total

Merchant The purpose of a merchant account statement is to understand your incomes and costs and

Merchant The Merchant Account Summary Report provides the total number of transactions and total

 See cash flow in real-time.

(2) approval of the budget

(3) execution of the budget

4) audit and evaluation of the budget.

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

Description Advantage/s Disadvantage/s

Number of Forecast Average Operating Forecasted room revenue

Example: 122 75% $105 365 $3,506,737

50 62% $90 310 62%of 50=31×90×310=$864900

15 98% $86 365 98%of15×86×365=461433$

300 89% $220 365 89%of300×220×365=21440100$

For service charges

Assessment Task 2- Case-Study

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

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

 Indicate if the identified deviations are positive or negative.

ITEMS PROJECTED ACTUAL DEVIATION % OF POSITIVE OR

ROOM 20,000,000 12,000,000 (8,000,000) 40% NEGATIVE

FOOD SALES 5,000,000 9,000,000 4,000,000 80% POSITIVE

LIQUOR 3,000,000 5,000,000 2,000,000 66% POSITIVE

WAGES 2,100,000 2,500,000 4,000,000 16% NEGATIVE

RENT 1,000,000 1,200,000 2,000,000 20% NEGATIVE

OVERHEADS 500,000 450,000 50,000 10% POSITIVE

 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 actual totals for sales on a month-by-month basis.

 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.

MONTH BUDGET ACTUAL $ % YTD YTD +/- & % +/-

JULY 50,000 49,300 (700) (1.4%) 50,000 49,300 -700 -1.4%

AUGUST 54,000 56970 2970 5.5% 1,04,000 1,06,270 2,270 2.18%

SEPTEMBER 58,000 66,160 8160 14.07% 1,62,000 1,72,430 10,430 6.43%

OCTOBER 62,000 65,500 3500 5.64% 2,24,000 237,930 13,930 6.21%

NOVEMBER 66,000 67,570 1570 2.37% 2,90,000 3,05,930 15,500 5.34%

DECEMBER 70,000 69,040 (960) (1.39%) 360,000 3,73,070 13,070 3.63%

Assessment Task 2- Case-Study

Name of ratio Short-term or Long-term

Quick asset ratio Short term

Proprietary ratio Long term

Working capital ratio Short term

Interest coverage Long term

Assessment Task 4: Project

REVENUE BUDGET – ACTUAL for 2015-2016

Bundling the accommodation

Package with meals

Suggest a new menu

Increase the cost of accommodation

Building and give a better deal

ANS: the four recommendations to give to reduce the cost

Frozen black berries

Decrease the number of eggs

Breads used for other purpose also.

Some of berries replaced by Frozen berries

Frozen black berries