Big red bicycle pty ltd scenario

01 - Requirements.docx

Requirements:

Font: Times New Roman

Size: Font size 12

Spacing: Single

12 APA Style reference and In-text citation

Minimum of 1100 words (References are not included in the 1100 words, but only the content of the written report)

PLEASE READ THE “Case Study.docx” AND THEN READ THE “YOU MUST READ THIS BEFORE ANSWERING THE WRITTEN REPORT - Checklist.docx”

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ASSESSMENT 1: WRITTEN REPORT

First page only is for Executive Summary:

EXECUTIVE SUMMARY (100 words)

In this section, this is a summary containing all the main findings and conclusions. This is what a person will think of what the report is saying and decide if that person will read it all. It is not to be confused with introduction. You need to explain in brief about the whole report in here.

INTRODUCTION (100 words)

Explain in brief about the background of the organisation

REPORT ANALYSIS (800 words)

Give overall review of the report which you are going to discuss in here.

Note* in the body section, please paraphrase the question and make a header for each question

CONCLUSION (100 words)

Explain conclusion here.

REFERENCE LIST

Give minimum 12 references (must be in APA Style referencing format) and In-text citations.

QUESTIONS

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For this assessment task, you are required to read the case study provided in the Case Study.docx and develop a written report of about 1100 words on team budgets or financial plans, making changes to team budgets or financial plans, contingency planning and financial management approaches using the guidelines provided. Students can use the given template for written report and contingency plan and are allocated with a week’s time to complete this assessment. The report should be detailed and well-structured and must include answers to the following:

1. Team budgets or financial plans

Provide the background to the budgets and financial plans you are responsible for by answering the following:

a. What is the name of your organisation (Big Red Bicycle) and describe the type of activities it conducts?

b. What is the name of the team that you manage (assume myself as Sam Gellar - Sales General Manager from the Case Study.docx) and describe the activities the team undertakes?

c. What team budgets or financial plans are you responsible for implementing and monitoring? Examples of budgets/financial plans may include:

· Cash flow projections

· Long-term budgets/plans

· Operational plans

· Short term budgets/plans

· Targets or KPI for production, productivity, wastage, sales, income and expenditure

2. Making Changes to Team Budgets or Financial Plans

Select one of the budget and answer the following:

a. Explain the purpose of the team budget or financial plan

b. Explain the team budget/financial plan you selected in terms of:

i. Is it achievable? Explain the reason for your response.

ii. Is it accurate? Explain the reason for your response.

iii. Is it comprehensive? Explain the reason for your response.

c. Identify the areas that could be adjusted in order to make improvements in the team budget/financial plan selected and the reasons why adjustments need to be made.

d. Identify the role of the person within the organisation who you would approach to discuss and clarify the team budget/financial plan.

3. Contingency Planning

A large part of a manager’s function is planning. Planning includes preparing contingency plans in the event the initial plans need to be varied. Using the team budget/financial plan in the previous part, give an example of a situation or event that would cause a problem/issue during the implementation phase of the team budget/financial plan.

a. Explain the contingency plan you would implement. Your contingency plan should include:

i. The consequences if the situation or event occurred

ii. The steps you would take and the records you would consult in order to identify the required adjustments to the budget/financial plan.

iii. The budget/financial plan adjustments that you would make

iv. The way that you would align the adjustments to achieve the original plan in task 2

v. The expected outcome if the contingency plan was implemented.

4. Financial Management Approaches

Before implementation of a budget/financial plan it is important that all members of the team who are impacted be the plan are involved in its formation and implementation.

Using the team budget/financial plan from previous tasks, explain the following:

a. The organisational process required to disseminate the relevant details of the agreed plan (not the contingency plan)

b. The steps taken to disseminate the information. Examples may include meetings, emails etc.

c. The methods you would use to communicate and gain agreements on the details of the plan

d. The team responsibilities that you would allocate to your team before implementation of the budget/financial plan

e. The feedback process you would use to ensure that members of your team understand their roles, responsibilities and the objectives of the budget/financial plan

f. The support methods or organisational processes you would use to ensure the team members are able to perform the financial management roles they are allocated

g. The identified resources and organisational systems you would access and how you would use them to manage the financial processes within the work team

Case Study.docx

BSBFIM501 Manage Budgets and Financial Plans

Case Study / Case Scenario

Big Red Bicycle Pty. Ltd.

Big Red Bicycle (BRB) is a bicycle manufacturer based in Bendigo, Victoria. The company produces bicycles which are sold to retailers in the Australian market.

The senior management structure of the company is given below:

Person Position

Michelle Yeo CEO

Tom Copeland Managing Director

John Black CFO

Stuart LaRoux Operations General Manager

Pat Roberts Senior Accountant

Sam Gellar Sales General Manager

Charles Pierce Production Manager

Holly Burke HR Manager

According to company strategic plans, the company aims to achieve a net profit before tax of $1,000,000. The major risks to this goal are:

· poor sales due to economic downturn (like COVID-19)

· increase in expenses such as wages

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 poor sales of one product.

Note: Just choose to consider manufacturing overseas

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 results are to be analysed in order to identify the profit level of cost centres, identify relationship between financial statistics and 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 finance manager.

· A Capital Expenditure (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 this master budget, 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 on 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 on 30 June.

Reporting requirements

Software applications to be used in reporting:

· Software environment – Windows

· Accounting Information System – BRB will use MYOB Account Right plus

· Data analysis – BRB will use Microsoft Excel

Actual results will be produced monthly by the MYOB accounting system. Actual variances to budget will be performed by Excel with a report prepared for senior management for significant variances.

Financial delegations

· Each manager is responsible for achieving the revenue budgets agreed to in 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/report, i.e. sales, expenses, CAPEX, cash flow, budget variation report

· period of the budget

Master budget with profit projections

Big Red Bicycle Pty Ltd

Master Budget FY 2019-2020 (figures in AUD)

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

Water

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

YOU MUST READ THIS BEFORE ANSWERING THE WRITTEN REPORT - Checklist.docx

NOTE! THIS IS JUST A GUIDE TO CORRECTLY ANSWER THE WRITTEN REPORT! PLEASE CHECK THIS ASSESSORS CHECKLIST BECAUSE THIS IS WHAT MY TEACHER WILL LOOK AT ON MY REPORT IF I ANSWER ALL THE QUESTIONS CORRECTLY. PLEASE ADDRESS ALL THESE CHECKLIST IF YOU HAVE MADE THE CORRECT WRITTEN REPORT!

Assessors Checklist

Did the Student provide evidence of their ability to:

Yes

No

Monitor and Control Finances

Explain the organisational processes used to monitor the work

team’s reports on actual expenses incurred in a performance of their financial functions.

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Explain the processes available to control costs incurred by the

work team in performance of their financial function

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Explain the processes used to monitor and modify contingency

plans.

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Explain the steps and organisational processes available to provide

feedback on the team’s expenses and costs incurred in performance of their financial functions.

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Explain the steps involved in using a spreadsheet as the tool to

identify the variances and overruns.

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Review Variances

Develop a scenario where there have been 3 areas of account variances (values less than originally planned) and 5 areas of

account overruns (values over the original plan)

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List the 8 accounts that are under and over the planned values, the original planned value, the actual (scenario under and over) values, and calculate the under and over variance difference and

percentages of each variance

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Explain the contingency adjustments that you would need to implement in order to maintain the financial objectives. to assist in your explanation, you may need to attach a copy of the original

budget/financial plan that is to be adjusted

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Describe the monitoring process you would then undertake to ensure the modification were sufficient or if further adjustment modifications may be necessary in order to achieve the financial objectives of the original budget/financial plan. If further modifications may be required, explain how you would identify and

implement them

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Explain the organisational procedures and protocols to report on the team’s budget/financial plan variances, the modifications and contingency plans implemented and the process to gain approval

from the appropriate personnel

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Review and Evaluate Processes

Explain the financial management processes that are used to monitor the effectiveness and reliability of financial activities of the

work team

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List the documents that you would use to collect and collate data and information on the effectiveness of the financial management

process

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Explain the approach you would use to analyse the data and information you gathered i.e. spreadsheet, tables, diagrams etc. In order to identify financial process improvement opportunities. An

example of your analysis may be attached to explain your approach

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Describe the areas of the financial management process that may be improved and your recommendations for process improvements to ensure the effectiveness, efficiency and reliability

of the financial management processes

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Describe the steps you would take to gain agreement from your

work team on the changes in the financial management process within the work team

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Explain the organisational processes required to implement and

monitor the agreed improvements

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Explain how the improved financial management process is more aligned with the financial objectives of the work team and

organisation

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