Having completed the first activity, you have now been asked to work with a 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 own capital and has also Secured a business loan of 50,000.

You have been provided with raw budget data below which you can manipulate and model appropriately. The cash/bank balance on 1 January is 150,000. Purchases of supplies are estimated to be 3000 paid per month. 25, 000 of equipment is to be paid for in January. Rental costs will be 2000 per month for 9 months and then this will rise to 3000 per month thereafter. 1000 per month of interest is payable on the secured business loan. Marketing costs are estimated to be 1000 per month, sales salaries will be 2000 per month and administrative salaries will be 3000 per month. Cash receipts from customers of 13000 will begin in March and will remain at this level for the rest of the year. A cash dividend of 4000 will be paid in December. You have been asked to prepare a memorandum that includes the following:

analysis to show the impact of the different individual scenarios below:

1. discounting prices by 20 percent, which in turn increases sales volume per month by 10 percent 2. increasing the marketing budget by 10 per cent per month, which in turn generates an additional 20 percent in sales revenue 3. offering suppliers one-months trade credit 4. Reducing rental/property-related costs by 15 percent per month.

Tasks to be done:

LO4: Prepare budgets for planning, control, and decision using spreadsheets.

P6: Prepare a cash budget from given data for an organization using a spreadsheet. P7: Discuss the benefits and limitations of budgets and budgetary planning, and control for an organization. M4: Identify corrective actions to problems revealed by budgetary planning and control for effective organizational decision-making.

D3: Justify budgetary control solutions and their impact on organizational decision-making to ensure efficient and effective deployment of resources.

An evaluation of the role that budgets play in the effective planning and control of resources in an organization such as your clients. This will include both benefits and any limitations of using budgets and the extent to which they can help identify problems and corrective actions.