Task 1 ROLE You are the manager of Sales Centre A, based in Adelaide. The centre has
Question:
Task 1
ROLE
You are the manager of Sales Centre A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect both the needs and importance to the business of Cost Centre A.
Scenario
The Sales General Manager, Sam Gellar, has asked you to review the master budget and cost centre budgets (Attachment 1) prepared by the Senior Accountant. She would like you to meet with her to discuss whether the budget projections are achievable, accurate, understandable and fair.
She would like you to look closely at the budget for your cost centre, note any changes you think are necessary, develop an argument for the changes and negotiate those changes (seek approval) at the next management meeting.
Information you are aware of includes:
- Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) are generally 30% less than the second quarter (Q2).
- Sales in Q2 depend on completion of 90% of repair and maintenance.
- Sales for Q2 have been estimated to be $1,000,000.
- Commission negotiated with members of the sales team is now at 2.5%.
Review
Download and review the master budget with profit projections (and sales cost centre expense budget)
AND
Make adjustments as per above scenario instructions and upload.
your spreadsheet MUST show formulas
Master budget with profit projectionsBig Red Bicycle Pty Ltd
Master Budget FY 2011/2012
FY
Q1
Q2
Q3
Q4
REVENUE
Commissions (2% sales)
60,000
15,000
15,000
15,000
15,000
Direct wages fixed
200,000
50,000
50,000
50,000
50,000
Sales
3,000,000
750,000
750,000
750,000
750,000
Cost of Goods Sold
400,000
100,000
100,000
100,000
100,000
Gross Profit
2,340,000
585,000
585,000
585,000
585,000
EXPENSES
General & Administrative Expenses
Accounting fees
20,000
5,000
5,000
5,000
5,000
Legal fees
5,000
1,250
1,250
1,250
1,250
Bank charges
600
150
150
150
150
Office supplies
5,000
1,250
1,250
1,250
1,250
Postage & printing
400
100
100
100
100
Dues & subscriptions
500
125
125
125
125
Telephone
10,000
2,500
2,500
2,500
2,500
Repairs & maintenance
50,000
12,500
12,500
12,500
12,500
Payroll tax
25,000
6,250
6,250
6,250
6,250
Marketing Expenses
Advertising
200,000
50,000
50,000
50,000
50,000
Employment Expenses
Superannuation
45,000
11,250
11,250
11,250
11,250
Wages & salaries
500,000
125,000
125,000
125,000
125,000
Staff amenities
20,000
5,000
5,000
5,000
5,000
Occupancy Costs
Electricity
40,000
10,000
10,000
10,000
10,000
Insurance
100,000
25,000
25,000
25,000
25,000
Rates
100,000
25,000
25,000
25,000
25,000
Rent
200,000
50,000
50,000
50,000
50,000
Water
30,000
7,500
7,500
7,500
7,500
Waste removal
50,000
12,500
12,500
12,500
12,500
TOTAL EXPENSES
1,401,500
350,375
350,375
350,375
350,375
NET PROFIT (BEFORE INTEREST & TAX)
938,500
234,625
234,625
234,625
234,625
Income Tax Expense (25%Net)
234,625
58,656
58,656
58,656
58,656
NET PROFIT AFTER TAX
703,875
175,969
175,969
175,969
175,969
Sales cost centre expense budget
Sales Centre A
Sales Centre B
Sales Centre C
Commissions
$20,000
$20,000
$20,000
Wages
$100,000
$100,000
$100,000
Telephone
$3,000
$3,000
$3,000
Office supplies
$1,000
$1,000
$1,000
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