Implement financial management approaches

Manage Budgets and Financial Plans (BSBFIM501)

TABLE OF CONTENTS

Assessment Task 1- Written Report………………………… .…..................3

Introduction…………………………………………………….....................3

Team budgets and financial plans…………………………….....................3

Making changes to team budgets or financial plans…………....................7

Contingency planning………………………………………….....................8

Financial Management Approaches………………………………..............9

Assessment Task2- Written Report………………………………..............10

Monitor and control Finances………………………………………...........10

Review Variances……………………………………………………............15

Review and Evaluate Processes…………………………………….........….17

ASSESSMENT TASK 1- WRITTEN REPORT

INTRODUCTION:

Kathmandu furniture is a manufacturer based in Glenorchy, Tasmania. The company produces furniture’s which are sold to relaters in the Australian market. According to company strategic plans, the company aims to achieve a net profit before tax of $1000,000. The major risk to this goal are:

Poor sales due to economic downturn

Increase in expenses such as wages

In further, Australian preparations, 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.

Budgeting and finance policy plan is very important as it helps to set the parameters for all financial budgeting. There are various plans and policies which should be followed strictly. All the reporting requirements, financial delegation and format for budgets and reports plays important role in whole plans and project.

1) Team budgets and financial plans.

The name of my organisation is Kathmandu furniture pty ltd. Furniture industry, all the companies and activities involved in the design, manufacture, distribution, and sale of functional and decorative objects of household equipment. ... Earlier furniture making was a handicraft, going back to the most ancient civilizations. The growing sophistication in technique brought a revolutionary change in the men who made furniture. Where previously carpenters and joiners had made furniture along with every kind of building construction in wood, several circumstances combined to create a new profession: that of cabinetmaker.

The senior management structure of the company is given below:

Person

Position

Kamala Lama

CEO

Henry Yeo

Managing Director

Lucy Gellar

CFO

Richey Burke

Senior Accountant

Sam Richard

Sales General Manager

Charles Pierce

Production Manager

Lucas More

HR Manager

Cash Flow projection

Receipts

Cash received from previous sales

$ 75,000

Cash received from cash sales

$55,000

(1)

$62,500

Expenditure

Cash paid for labour

$11,000

Cash paisa for rent

$8,500

Cash paid for marketing services

$800

Cash paid for stock

$31,300

Cash paid for Equipment

$750

(2)

$52,350

Cash increase during August (1) minus(2)

$10,150

Cash at start of August

$17,200

Cash at end of August

$27,350

Long-term budgets/plans

Long term budget is a budget plan for long time of period more than one year. In long-term budget the uncertainty is more than in short-term budget because the market cycle and its movements are more easily forecast in the short-term budget plan. Long-term budget is specially used in big business with big amount of investments. There are three types of budget such as balances budget, surplus budget, and deficit budget.

Operational Plan

Operational plan is also known as work plan. It is a figure of our department will give emphasis for the future use, mostly for coming year. Just we need to put our strategic plan with our future goal while making operational plan and we need to get it in daily to weekly basis. It is plan which provides a clear picture of how a team or department will do the activities to get the objective of an organisation’s aim.

Store Budget

Sales Centre A

Sales Centre B

Sales Centre C

Sales Centre D

Sales Centre E

Sales

640,000

640,000

640,000

640,000

640,000

Commissions

20000

20000

20000

20000

20000

Wages

100,000

100,000

100,000

100,000

100,000

Telephone

3,000

3,000

3,000

3,000

3,000

Stationery

18,000

18,000

18,000

18,000

18,000

Electricity

7,000

7,000

7,000

7,000

7,000

Rent

20,000

20,000

20,000

20,000

20,000

Office supplies

1,500

1,500

1,500

1,500

1,500

Total Expenses

979,000

979,000

979,000

979,000

979,000

Net Profit

339,000

339,000

339,000

339,000

339,000

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

Master Budget with Profit Projections

Kathmandu Furniture Pty Ltd

Master Budget FY 2016/2017 (figure in AUD)

FY

Q1

Q2

Q3

Q4

REVENUE

Sales

3,200,000

800,000

800,000

800,000

800,000

Commissions (2.5%)

80,000

20,000

20,000

20,000

20,000

Direct wages

190,000

47,500

47,500

47,500

47,500

Cost of goods Sold

300,000

75,000

75,000

75,000

75,000

Gross profit

2,630,000

657,500

657,500

657,500

657,500

EXPENSES

Accounting fee

20,000

5,000

5,000

5,000

5,000

Legal fees

6,500

1,625

1,625

1,625

1,625

Bank charges

1,000

250

250

250

250

Office supplies

5,000

1,250

1,250

1,250

1,250

Postage & prating

1,000

250

250

250

250

Dues & maintenance

500

152

152

152

152

Telephone

25,000

6,250

6,250

6,250

6,250