In this assignment, you need to produce a budget report for a business based on one of
Question:
In this assignment, you need to produce a budget report for a business based on one of the three proposals you choose. This assignment includes preparing two budgets (a budgeted income statement and a cash budget) and a report based on the forecasted numbers from these two budgets. The case study is described in detail below. You (and your team) work in a boutique firm called ‘Business Advisory Pty. Ltd.’, a business that provides strategic and financial advice to other businesses. Your role in the firm is that of a business consultant. To this end, you are often required to produce financial forecasts and budget reports for clients. Mr. James Hunter and Dr. Olivia Ng (Optometrist) are business partners who have approached your firm looking for business advice. Given the current global COVID-19 pandemic, business has been slow and so the clients would like to take this opportunity and take their business to the next level. Their business is an optometry business trading under the name ‘i-Optometry’. The business is a brick-and-mortar store located in Burwood and retails eyewear, that is, sunglasses and prescription glasses. They also provide optometry services to customers in the form of comprehensive eye-tests. As part of their business operations, i-Optometry retails the following types of eyewear: Sunglasses retail for $200 each. It costs $60 each and the business purchases them from a local supplier.
Prescription glasses retail for $150 each. It costs $80 each to buy them from the same local supplier who provides the sunglasses. i-Optometry also provide comprehensive eye-tests to customers who wish to assess eye health. The selling price of one comprehensive eye-test is $75.
The owners believe that they can improve business by expanding their storefront.
Specifically, they would like to increase the floorspace of the existing store to include some additional display cabinets and expand the number of eye-test rooms to reduce customer wait-time. Both owners have some reservations about this project as it would require large initial setup capital investments (i.e. cost of project or called “initial setup costs”) and loans required. However, given the current climate, it would be cheaper to do this now than later when the prices rebound.
Additional Notes:
Note that for the purposes of the financial forecasts and budgets, you can assume all items are GST free.
Due to COVID-19, i-Optometry is effectively shut down and the owners are planning to reopen on 1st January 2021. This effectively means year 2020 is a write-off and you can assume there to be no sales, costs, or purchases in December 2020. your manager would like you and your team to complete the ‘Cash Budget’ for the project your team has selected and for the period between January 2021 to December 2021 inclusive.
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso