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ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan ASSESSMENT INSTRUCTIONS Overview Prior to commencing the assessments your assessor will explain each task and the terms and submission of your task. Please consult your assessor if you are unsure of any questions. It is important that you understand adhere to the terms and conditions and address fully each task. If any task I not fully address than your assessment task will not be marked. The assessor will support you throughout this process. Written work The assessment tasks are used to measure your understanding and underpinning skills and knowledge of this unit of competency. When answering please ensure you address each criterial and sub point, demonstrate your research each of the questions and cover the topic in a logical and structured manner. Active participation It is a condition of enrolment that you actively participate in your studies. Active participation is completing all tasks on time. If you do not participate you will be required to report to Student Services Coordinator Plagiarism Plagiarism is taking and using someone else's thoughts, writings or inventions and representing them as your own. Plagiarism is a serious act and may result in a student's exclusion from a course. When you have any doubts about including the work of other authors in your assessment, please consult your trainer/assessor. The following list outlines some of the activities for which a student can be accused of plagiarism: Presenting any work by another individual as one's own unintentionally Handing in assessments markedly similar to or copied from another student Presenting the work of another individual or group as their own work Handing in assessments without the adequate acknowledgement of sources used, including assessments taken totally or in part from the Internet If it is identified that you have plagiarised within your assessment task, then we will organise a meeting to discuss this with you. Copyright You must be careful when copying the work of others. The owner of the material may take legal action against you if the owner's copyright has been infringed. You are allowed to do a certain amount of copying for research or study purposes. Generally, 10% or one chapter of a book is acceptable, where the participant is studying with, or employed by, an educational institution. Competency Outcome There are two outcomes of assessments: S=Satisfactory and NS = Not Satisfactory. You will be awarded C=Competent if you have completed all tasks. SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |1 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan Assessment appeals process If you feel that you have been unfairly treated during the assessment and you are not happy with your assessment and you are unhappy with the outcome you have a right to lodge an appeal. You must first discus with your trainer/assessor. If you would like to proceed further with the request you need to lodge an appeal to the Course Coordinator in writing outlining the reason(s) for the appeal. Special Needs Candidate with special needs will have their request for adjusts to suit these needs addressed immediately. Application of the unit This unit applies to all tourism, hospitality and event sectors and the budget may be for an entire organisation, for a department or for a particular project or activity. It applies to senior personnel who operate independently or with limited guidance from others and who are responsible for making a range of financial management decisions. Assessment Activity Matrix - The students who complete all activities will demonstrate the required skills, knowledge and understanding of all aspects in receiving and providing customer service. Elements Prepare budget information Prepare budget Finalise budget Monitor and review budget Required skills Required knowledge Critical aspects of evidence Performance Criteria 1.1, 1.2, 1.3, 1.4 2.1, 2.2, 2.3, 2.4, 2.5 3.1, 3.2, 3.3, 3.4 4.1, 4.2, 4.3, 4.4, 4.5 Assessment tasks Task 1 and task 2 Task 2.1 Task 2.2 Task 2.3 Tasks 1, 2, & 3 Tasks 1, 2, & 3 Tasks 1, 2, & 3 Critical aspects of evidence: You must be able to undertake the following tasks after completing this unit: prepare multiple budgets to meet specific and differing workplace needs consult on budget components and monitor and review budgets against performance over a budgetary life cycle analyse the factors that impact the budget integrate knowledge of budget preparation and monitoring practices and techniques complete draft and final budgets within designated timelines. SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |2 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan ASSESSMENT TASK 1 Instructions to the student In this task you are required to demonstrate your ability to complete a comparative balance sheet and gain an understanding of how to prepare budgets. You can do this in consultation with your assessor who will provide you with feedback. Once you have completed the tasks, discuss your answer with your assessor. (This task can be handwritten) 1.1 Prepare a balance sheet for the year ended 30 June 2009 for TML Ltd. Refer to the additional information provided to complete the balance sheet. TMH Ltd. Comparative Balance Sheets for years ending 30 June 2008 and 2009 $2009 Assets: Current Assets: Cash Accounts Receivable Inventory Total Current Assets: Land Buildings Less Accumulated Depreciation Total Land and Buildings Total Assets: (120,000) $2008 46,000 134,000 176,000 356,000 140,000 290,000 (105,000) 325,000 681,000 Liabilities Current Liabilities Expense Payable Accounts Payable Total Current Liabilities Long-Term Borrowings 124,000 197,000 321,000 139,000 Owner's Equity Ordinary Share Capital Retained Earnings Total Owner's Equity 45,000 176,000 221,000 Additional Information: Profit for year ended 31 June 2009 was $94,000 Cash received from customers totalled $330,000 Cash paid for inventory totalled $170,000 Cash paid for expenses totalled $20,000 Dividends paid during the year were: $67,000 During the year, accounts receivable decreased by $10,000 Cost of new buildings acquired during the year $125,000 SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |3 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan 1.2 You are now required to analyse the balance sheet utilising both vertical and horizontal analysis and ratio analysis. Document your answer in the space below. 1.3 Once the above statements are completed, you are required to further analyse the company's performance by comparing the above data with company goals as stated below and explain how the company goals have varied from the actual data. SCENARIO: TMH Management had the following aims for 2009: To reduce liabilities by 5% To increase profits by 8% To increase sales by at least 5% Undertake the tasks in Assessment 1 to demonstrate the variance between management goals and actual data. Were these goals met? Were they exceeded? Did they fall short? ASSESSOR CHECK Result Satisfactory Unsatisfactory Feedback Assessor Declaration: I declare that I have assessed this student in this task and have provided appropriate feedback. Signature: ____________________________ Date: ____/_____/_____ SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |4 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan ASSESSMENT TASK 2 In this task you will be required to prepare a budget, finalise a budget, monitor and review the budget. This task must be undertaken individually and presented professionally to your assessor. The report must also be word processed (typed up) and not hand written. Read the case study below and complete this task. Case study You manage a small event management company. The business is growing steadily and you have decided to develop a budget to help plan for future growth. Over the past year, sales have been increasing by 6% per quarter, with the most recent quarterly sales being $48,000. Your objective is to grow the gross profit by 8% per quart higher than this projection offers. Expenses for the last quarter have been as follows: Staffing (two staff) = $18,600 Telephone/Internet = $680 Rent = $3,600 Advertising = $1,250 Equipment Hire = $8,400 Event catering = $13,850 Without any major changes you are projecting that sales will continue to increase by 6% per quarter, with equipment hire, event catering and telephone/internet expenses rising by 4%. 2.1. Prepare budget information Develop a report that includes the following information: What are your company's objectives - The company's objective is to grow the gross profit by 8% per quart higher than this projection offers before. What budgets will you need to prepare? -You will need to prepare for cash budgets , cash flow budgets and event budgets , sales budgets. What sources of information will you see to develop a budget? There are many type of sources you will see to develop a budget such as -Competitor research, Customer or supplier research -Income and expenditure figures from previous time periods -Departmental, event or project budgets from previous periods SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |5 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan Conduct a SWOT analysis and explain what internal and external factors might impact on the budget? The impacts that could effect our budget predictions may be -Supplier availability and costs -Any significant price movements for commodities or other items -Any new legislation or regulations that have been passed or enacted -Organisational objectives for the next one to five years, or whatever period the business has forecasted for further changes Explain how you will involve your colleagues in the budget planning process. There is many ways to involve your colleagues in the budget like: -All staff meetings where information is delivered verbally, face to face as described above -Departmental meetings where information is delivered verbally, face-to face as described above - Asking the colleagues to collect all information -Listening to colleagues' opinions 2.2. Prepare and finalise the budget You are now required to prepare and finalise the budget. You need to undertake the following tasks: Prepare a budget for the next four quarters based on the projected sales growth of 6% Sales (6%) Staffing Telephone/ internet (4%) Rent Advertising Equipment hire (4%) Event Catering Actual budget 48,000 18,600 680 3,600 1,250 8,400 13,850 SITXFIN501 AssessTools V.2 Issued 056/11/2014 Q1 Q2 Q3 Q4 48,000x1.06 =50,880 18,600 680x1.04 =707 50,880x1.06 =53,932 18,600 707x1.04 =735 53,932x1.06 =57,168 18,600 735x1.04 =764 57,168x1.06 =60,598 18,600 764x1.04 =795 3,600 1,250 8,400x1.04 =8,736 13,850x1.04 =14,404 3,600 1,250 8,736x1.04 =9,085 14,404x1.04 =14,980 3,600 1,250 9,085x1.04 =9,448 14,980x1.04 =15,579 3,600 1,250 9,448x1.04 =9,826 15,579x1.04 =16,202 P a g e |6 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: (4%) Profit/Loss 1,620 SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan 3,583 5,682 7,927 10,325 Recommend ways of improving the gross profits by 8% per quarter over the projected amounts Actual Budget Q1 Q2 Q3 Q4 Sales $48,000 $51,000 55,000 58,850 $60,405 Staffing $18,600 $18,600 $18,600 $18,600 $18,600 Telephone /Internet $680 $680 $750 $783 $898 Rent $3,600 $3,600 $3,600 $3,600 $3,600 Advertising $1,250 $1,250 $1,250 $1,250 $1,250 Equipment Hire $8,400 $8,760 $9,362 $10,757 $10,568 Event catering $13,850 $14,240 $15,300 $15,300 $14,340 Profit $1,620 $3,870 $6,138 $8,560 $11,149 Develop a second budget for the next four quarters implementing your suggestions. -There are two ways to increase your profit: reduce costs or increase sales. For most small business , the easiest way to increase profitability is to reduce costs such as reduce the staffing expense, when the business is not busy. Telephone, Equipment Hire, Event catering expense we should review the budgets for next year. 2.3. Monitor and review the budget Once you have developed the budget, you are required to monitor and review the budget. By the end of the first quarter you can see that your actual sales grew by only 4% and expenses were as follows: Staffing = SITXFIN501 AssessTools V.2 Issued 056/11/2014 $22,400 P a g e |7 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan Telephone/Internet = $580 Rent = $3,600 Advertising = $1,650 Equipment hire = $9,800 Event catering = $14,250 a) Prepare a profit and loss report for this quart, including the budged, actual and variance amounts. Budget Actual Variance F/U Sales $50,880 $49,920 960 U Staffing $18,600 $22,400 3,800 U Telephone /Internet $707 $580 127 F Rent $3,600 $3,600 - - Advertising $1,250 $1,650 400 U Equipment Hire $8,736 $9,800 1,064 U Event catering $14,404 $14,250 154 F Profit $3,583 $(2,360) 5,943 U Sales- Doing promotion to attract costumer for special days . Staffing-Cutting shift when the business is not busy . Advertising-Finding the cheaper advertising supplier . Equipment Hire-Trying to negotiate with the Equipment company to get the special price. Profit-The most of important things to make profit that we should reduce the expenses when it is not necessary. b) Produce a revised budget for the second, third and fourth quarters, with an explanation of what actions you will take to deal with the deviation to the budget. SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e |8 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan Q2 Q3 Q4 Sales(4%) $49,920 $51,917 $53,993 Event Catering(4%) $14,250 $14,820 $15,413 Gross profit $35670 $37,097 $38,581 Staffing $22,400 $22,400 $22,400 Telephone/internet(4%) $580 $603 $627 Rent $3,600 $3,600 $3,600 Advertising $1,650 $1,650 $1,650 Equipment Hire (4%) $9,800 $10,192 $10,600 Action that could be take to deal with deviation to the budget -Staffing- We can reduce the shift when the business is not busy -Advertising- We can find a cheaper advertising company or we can use another ways to promote our products. You must ensure that your report is professionally presented, word processed and must be your own work. Assessor's observation checklist Did the student demonstrate the following skills: Effective communication skills such as negotiating complex and conflicting budget requirements Used active listening, body language, gave and received feedback Used critical thinking skills to analyse data and conduct a SWOT analysis Used initiative and enterprise to draft budget and seek feedback and advice Literacy and numeracy skills to read interpret data Planning and organisational skills to develop budget in time Problem solving skills to identify challenges and come up with resolutions Self-management skills to take responsibility Teamwork skills to work in a team environment Technology skills to develop budget Result Satisfactory Unsatisfactory SITXFIN501 AssessTools V.2 Issued 056/11/2014 Yes No P a g e |9 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan Feedback Assessor Declaration: I declare that I have assessed this student in this task and have provided appropriate feedback. Signature: ____________________________ Date: ____/_____/_____ ASSESSMENT TASK 3: Knowledge Questions Instructions The knowledge questions will assess your underpinning knowledge in this unit of competency. Read each question carefully and provide detailed answers as per the instructions. 3.1 Explain the following budget terminology. (Guide: 1 to 2 sentences in each) Cash budgets An estimation of the cash inflows and outflows for a business or individual for a specific period of time. Cash budgets are often used to assess whether the entity has sufficient cash to fulfil regular operations and/or whether too much cash is being left in unproductive capacities. Sales budgets The sales budget contains an itemisation of a company's sales expectations for the budget period, in both units and dollars. If a company has a large number of products, it usually aggregates its expected sales into a smaller number of product categories or geographic regions; otherwise, it becomes too difficult to generate sales estimates for this budget. The sales budget is usually presented in either a monthly or quarterly format; presenting only annual sales information is too aggregated, and so provides little actionable information. Funding acquittals An acquittal is the process of evaluating and reporting on the outcomes and expenditure of funds provided by Arts NSW. For an organisation, acquittals are also a useful way to assess a program's operations, efficacy, and strengths and weaknesses. Capital expenditure Capital expenditure, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. It is often used to undertake new projects or investments by the firm. This type of outlay is also made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building, to purchasing a piece of equipment, or building a brand new factory. SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e | 10 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan 3.2 When planning a budget explains what data and data sources will you require? (Guide: 1 to 2 sentences in each) The information system policy must be formulated at a high government level, as it will eventually have to provide support for the fisheries policy at this level. A legal framework ensuring the active participation of fishermen in providing information must be available in an early stage of development. 3.3 What are the financial reporting cycles relevant to the hospitality sector? (Guide: 2 points) ACCOUNTING AS THE LANGUAGE OF BUSINESS FINANCIAL STATEMENTS MANAGEMENT REPORTS 3.4 What internal and external factors could impact on budget development? (Guide: 1 to 2 sentences in each) -The best thing about internal factors is that you can control many of them. Some factors, such as your business's reputation, image and creditworthiness, are a result of the way you run your business. Other factors, such as your organisation's management structure and staffing and the physical decor of your business, are based on your business decisions and you can change them as you see fit. Changing internal factors usually involves some indirect costs, such as lost productivity while new employees are trained, some direct costs, such as a penalty for terminating a lease before it expires, or some combination of the two. -External factors are all those things that are beyond your control. Tight lending conditions, government regulations and competition are some of the external factors that affect virtually every small business. Strategic planners anticipate and manage some of the circumstances that affect their business. Exploring alternative financing sources until lending restrictions ease, developing plans for compliance with regulations and enhancing innovation and service to stay ahead of the competition are forward-thinking ways to keep external factors from threatening the survival of your business. 3.5 Explain what financial reports could include: (Guide: 1 to 2 sentences in each) SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e | 11 ASSESSMENT TASK Unit of competency: Student's ID: Assessor's name: SITXFIN501 Prepare and monitor budgets 38133 Chiao Hsin Pan inin Pan A balance sheet, also referred to as a statement of financial position, reports on a company's assets, liabilities, and ownership equity at a given point in time. An income statement, also known as a statement of comprehensive income, statement of revenue & expense, P&L or profit and loss report, reports on a company's income, expenses, and profits over a period of time. A profit and loss statement provides information on the operation of the enterprise. These include sales and the various expenses incurred during the stated period. A statement of changes in equity, also known as equity statement or statement of retained earnings, reports on the changes in equity of the company during the stated period. A cash flow statement reports on a company's cash flow activities, particularly its operating, investing and financing activities. 3.6 Explain why you would need to involved and seek feedback from colleagues when planning a budget. (Guide: 1 to 2 sentences in each) We would need to seek feedback from colleagues , you will improve your skill when your colleagues has skill or knowledge that you do not know. Result Satisfactory Unsatisfactory Feedback Assessor Declaration: I declare that I have assessed this student in this task and have provided appropriate feedback. Signature: ____________________________ Date: ____/_____/_____ SITXFIN501 AssessTools V.2 Issued 056/11/2014 P a g e | 12