Home Solutions 1. Identify and explain the key principles of budgetary control
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ASSESSMENT COVER SHEET
Subject Name: Budgeting
Method: Written and Practical Questions
Competency Title/s: FNSACC402 A –Budgeting
Assessment 1 (100 Marks)
Purpose of this assessment:
The purpose of these Assessment Tasks is to assess that student is able:
Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.
This unit of competency contains the employability skills.
In judging how well a student has achieved the desired outcomes outlined in performance criteria, the following aspects will be considered:
To complete the unit requirements safely and effectively, the individual must:
Task 1: Oral / Written (questions and answers)
Strategic planning is important for the success of a company/ business because of the following,
• Communicating or "marketing" the plan,
• managing the implementation of the plan,
• supervising the actual work, and • monitoring and reporting progress on the plan
On an ongoing basis the organization should:
• evaluate of its performance by gathering and analysing information;
• inform the planning group to review performance and reassess goals, outcomes, strategies to make recommendations for changes.
Three critical steps must be accomplished prior to developing a strategic plan: vision,evaluation or assessment and implementation
In each of these areas, you will need to review and build on what is already in place—vision and mission statements, state‐wide assessments, and input from ongoing groups of internal and external stakeholders already engaged in planning.
For planning, you have to establish priorities by considering the needs, strengths, and resources of your organization. Keep in mind that
• What you want to achieve in the future?
• What will we do to get there?
• How you know if you are making progress? make your draft document and circulate it for input, revise and finalize.
The following steps ensure that plans are used to guide the work of the organization:
Update your plan continuously,this will keep it current and meaningful to the organization.
A financial forecast is a tool that allows you to use your resources where they’remost needed, so you can control the cash flow of your business, instead of itcontrolling you. It allows you to control your money so you are more likely toachieve your desired net profit.
Key Performance Indicators:
Task 2: Practical Exercises
Question 1 – Master Budget 5 marks
Master budget is not a single budget. It is the name given to the complete set of budget used in an organisation. Most budgeting systems comprise a number of individual budgets that are linked by common figures, bases or assumptions.
The master budget, therefore, is a combination of budgets that reflects the integrated plans and expected financial results of all operations and departments of the organisation.
The following diagram is supposed to be a typical master budget network for a provider of trading businesses. Match the appropriate labels to the appropriate boxes below.
Question 2 – Simple Cash budget 15 marks
a) Kollette runs a handbag shop in the Wollongong. He prepares a simple cash budget quarterly to ensure that he has sufficient funds to operate the business.
The figures in the table below show three (3) months cash budget and are all GST inclusive.
Cash budget for 3 months ending 30 September 2016
Receipts from customers (Sales)
Payments to suppliers (purchases)
Stationery, other costs
Total cash outgoing
Net cash increase (decrease)
Add Opening cash balance
Closing cash balance
Note: The opening cash balance on 1 July 2016 was $2,000
Students are to prepare the budget for Kollette below using an Excel spreadsheet. In the budget, students must use the Excel formulas to generate Total cash outgoing and net cash increase (decrease). For example, the net surplus/deficit is equal to the cash in from sales less the sum of the cash out for operations (cash payments). In addition, students are to calculate closing cash balances and opening cash balances for the month of July, August, September and total. (The opening cash balance on 1 July 2016 is given above).
b) Kollette collected the actual figures for the three (3) months’ operations (July to September) as follows.
Cash from sales $ 285,000
Cash for purchases $147,000
Shop expenses $12,000
Stationery, other costs $2,400
Students are required to add a new column (Actual) on the right side of “Total” column to the budget to include the actual cash flows, using Excel. In the budget, students must use the Excel formulas to generate total cash outgoing and net cash increase (decrease). For example, the net surplus/deficit is equal to the cash in from sales less the sum of the cash out for operations (cash payments). In addition, students are to calculate closing cash balances and opening cash balances for the three (3) months’ actual figures.
The heading is done for you below.
Cash budget for three months ending 30 September 2016
c) Performance reporting is the documentation of the variance between actual results and budget expectations. You are asked by Kollette to create a performance report for his handbag business for the three (3) months ended 30 September 2016.
Students are required to add a new column (Variance) on the right side of the above “Actual” column for the variance between budget and actual figures. Students must calculate the variances in dollar ($) amounts and percentage (%). In the performance report, students must provide the constructive analysis and recommendation to describe the comparisons as well as suggestions to manage cash surplus or deficit.
d) Explain possible reasons of the variances for Kollette’s cash flow variances. In addition, provide a recommendation for the usage of net cash flow for the quarter ended 30 September 2016.
e) What is the purpose of using a cash budget? List advantages of using the cash budget in businesses.
Question 3 – Sales budget (October 2016) 10 marks
Continue from Kollette ’s handbag sales business, students are to prepare the following sales budget.
Kollette provided the following details regarding to his handbag sales for October 2016.
The following units were sold in September 2016 at the same prices above.
Kollette is now working on his October estimates. Kollette expects the handbag sales will be increased by 15% on the September figures.
Complete the following sales budget in units and in dollars for Kollette for the month of October 2016.
Sales budget for October 2016 – in units
September Sales (units)
October estimate (units, rounded up)
Sales budget for October 2016 ($)
Unit selling price
Question 4 – Sales budget (November and December 2016) 10 marks
Continue from the information in the task 3, students are to prepare the following sales budget.
Kollette is now preparing a sales budget for November and December 2016. Consider the following points to prepare the sales budget for November and December.
a) Complete the following sales budget in units and in dollars for Kollette for the month of November and December 2016.
Sales budget for November 2016
Discount range (units, rounded up)
Normal range (units, rounded up)
Sales budget for December 2016
b) Complete the sales budget for Kollette for the three months ended 31 December 2016
Sales budget for the three months ended 31 December 2016
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