Having completed the first activity, you have now been asked to work with hospitality and catering start-up business that your firm has just taken on as a client. The business is particularly in need of support and guidance with budgeting and how it can be used to inform efficient resource allocation and support effective control and decision making.

The founder of the business is investing 100,000 of their capital and has also secured a business loan of 50,000.

You have been asked to prepare a memorandum that includes the following.

Production of a 12-month cash budget that makes use of variance analysis to show the impact of the different individual scenarios below:

1. Discounting prices by 20%, which in turn increases sales volume per month by 10%

2. Increasing the marketing budget by 10% per month, which in turn generates an additional 20% in sales revenue

3. Offering suppliers one-months trade credit 4. Reducing rental/property related costs by 15% per month.

From the following information prepare a cash budget for the 12 months to 31st December 2023.

Adjustments

1. The founder of the business is investing 100,000 of their capital and has also secured a business loan of 50,000.

2. Discounting prices by 20%, which in turn increases sales volume per month by 10%.

3. Increasing the marketing budget by 10% per month, which in turn generates an additional 20% in sales revenue

4. Offering suppliers one-months trade credit.

5. Reducing rental/property related costs by 15% per month.