Case Study A: Background information Case Study relates to Tasks 1-3 Snazzy IT Solutions is an IT consultant firm based in Perth. The company provides IT support on a fee for service basis to corporate entities throughout the Perth and extended area. The Management structure is provided below: John Nix Chief Executive Officer Company Accountant Ann Ling You (student) IT Service Manager Jo Sales Manager Key risks to achieving this goal are: . Economic downturn in WA may impact sales Rising expenses such as marketing/advertising, wages and contractor fees Your role You are the Business Manager for Snazzy IT Solutions. Management of the budget process (preparation, setup, implementation, monitoring and review) is part of the key responsibilities in your role. CS Scanned with CamScanner I TASK 1: Monitor expenditure and control costs Actual results for the first quarter have been finalized for Snazzy IT. The relevant Excel file can be downloaded from Blackboard. You have been asked to do the following: Prepare a performance report template that provides for a comparison of budget and actual expenditure. The spreadsheet must be set up to include columns for the quarter. As per organizational guidelines the template must include actual and budget numbers plus variance columns showing the variance for the quarter as both a dollar amount and a percentage. Actual figures have now been finished for quarter 1. Utilize the Excel workbook to prepare a performance report for quarter 1. Based on the performance report prepared for quarter 1, suggest areas you would investigate further and why. TASK 2: Modify financial contingency plan As a result of the current economic climate there is a risk of sales being under projection by up to 20%. The firm can manage falling sales up to 12.5% which means that any further reduction could have a significant impact in the company's ability to meet debts as and when they fall due. Consider the contingency plan prepared below. One aspect of the plan has already been implemented being the monitoring of budget and actual expenditure via the quarterly performance report. RISK/CONTINGENCY LIKELIHOOD OF OCCURRENCE CONSEQUENCES POSSIBLE ACTION PLAN Monitor actual Sales volume decreased 20% Less cash flow Inability to meet debts as and . Medium when they fall due CS Seanned with CamScanner Permanent staff have given feedback on the following: performance to budget quarterly Additional marketing/advertising Implement incentive program for client referrals Reduce expenditure on overtime and staff amenities I Staff are resentful of expectations that they will continue to work overtime but 'unpaid'. There are no incentives for internal staff to drive sales as currently the firm does not offer an internal incentives program and does not pay any commissions. The overall opinion on contract employees is that they waste time and distract others. Two contracts have already expired for contractors bought in on specific projects, yet they are still employed. Other wastage areas such as postage and printing, stationery, electricity, subscriptions have not been factored as cost saving contingencies. General staff have been excluded from budgetary decisions. Required Prepare a complete contingency plan provided using the table above as a guide. I Budget & Actuals(6).xlsx - Excel (Product Activation Failed) DATA REVIEW VIEW FILE HOME INSERT PAGE LAYOUT FORMULAS F13 XV fx A 1 2 Snazzy IT Solutions 3 Statement of Financial Performance 4 For quarter ended 30 September 2017 5 6 7 8 FEE REVENUE 9 B C D E F G Actual 339,000 10 Expenses 11 General and Admin 12 Accounting fees 3,000 18 Payroll tax 13 Contractors 14 Electricity 15 Insurance 16 Legal fees 17 Office cleaning 19 Postage and printing 20 Rent 21 Repairs and maintenance 22 Staff amenities 50,000 1,750 5,500 2,000 3,000 5,460 300 28,000 880 23 Subscriptions 24 Superannuation 25 Telephone 26 Wages & Salaries 27 28 29 Marketing 30 Advertising 31 32 Finance 33 Bank charges 34 1,485 * 250 11,526 2,470 122,233 237,854 * 3,750 104 35 TOTAL EXPENSES 241,708 36 NET PROFIT BEFORE TAX 97,293 37 Income tax expense (30%) 29,188 38 NET PROFIT AFTER TAX 68,105 39 40 41 42 43 43 CS Scanned with CamScanner Master Actual Q1 + Activate Wir Go to Settings to