BSBFIN501 - Manage Budget and Financial Plans Assignment

Assignment Task

Overview

The purpose of this assessment task is for you to demonstrate your ability to manage the budget and financial performance of an organization for one reporting period (one quarter)

Task

1: Access and analyze organizational budgets and financial statements.

For this task, you need to read a case study, analyze several financial statements and then answer a series of questions.

Supporting documentation

To complete this task, you will need to access the following financial statements provided in the appendix below.

• Perfect Plants Profit and Loss Statement Q2 FY2021-22.
• Perfect Plants Quarterly Budget Q2 FY2021-22.
• Perfect Plants Quarterly Budget Q3 FY2021-22.

You will also be required to access the ATO website to prepare your responses and provide adequate referencing where applicable.

Case Study Scenario

Perfect Plants Pty Ltd is a mid-sized wholesale plant nursery based in the western suburbs of Sydney. As well as their wholesale business, they have a small retail operation and propagation facility where they grow a select number of specialist varieties of orchids.

You are the Sales Manager for the Wholesale Department at Perfect Plants Pty Ltd. You have a team of nine salespeople and one horticulturalist who assists in the filling of specialist orders.

Due to the volatility of the environment that you operate in, the revenue or cost figures usually fluctuate. Also, in the last couple of days, the company has gone through internal changes and fluctuations as well.

Market Fluctuations

• Over the past few months, the market has witnessed an increased inclination in consumers to spend on plants for their homes and businesses. Also, given the increased income in the hands of buyers, there has been an increase in sales of nurseries in the country. The average increase in sales for these competitor nurseries has been 20%, as per a market report.

The fuel and transport costs have risen throughout the country. This has been due to the oil crises that have recently hit the world economy. This increase in fuel costs will also cascade in the cost of raw materials being transported throughout the country.

• and, therefore, not only impacting the consumer transport but production transports as well. The current average increase in travel costs has been 18%.

Internal changes:

• The dealer who supplied your organisation with raw materials has also collaborated with some competitor firms and thus increased his prices by 13%. At the moment, you are bound to deal with him till you find another dealer.
• The top management of the firm has undergone some shifts due to which a number of people have left the organisation. This attrition is expected to get even worse in the coming months before getting stable again. Currently, 23% of our wage expense has fallen and shall fall further.

While operating in the second quarter, you expect certain figures to drop and rise in the proposed budget.

Questions

1. Based on your analysis of the proposed budget along with the highlights of the external and internal environment, what do you think would be an issue with the proposed budget? 

2. What contingencies plans would be needed for addressing the budget overruns?

3. Evaluate the income tax rate applied and if GST will be applicable for Perfect Plants Pty Ltd.

Perfect Plants Pty Ltd must be classified as a base rate entity or as "otherwise" based on its taxable income in order for us to assess the income tax rate that is applied to it.

Entities with Base Rates:

Entities classified as base rate are those whose total revenue is less than $50 million. Base rate entities are subject to a 25% tax on their taxable income during the 2022–2023 tax year. Otherwise (Entities with Non-Base Rates): Entities with non-base rates pay 30% tax on their taxable income.

We don't have the total turnover figure for Perfect Plants Pty Ltd based on the information supplied. Should its total revenue be under $50 million, it would be considered a base rate entity and subject to a 25% tax rate. If not, it would be subject to the regular 30% tax rate.

In terms of Perfect Plants Pty Ltd's eligibility for the Goods and Services Tax (GST), it's essential to remember that Australian companies with yearly sales of at least $75,000 must register for and collect GST on taxable deliveries. Nonetheless, companies with annual revenue less than $75,000 have the option to voluntarily register for GST.

Perfect Plants Pty Ltd is required to register for GST and charge GST on applicable sales since it is a wholesale and retail firm with a high probability of having a turnover of more than $75,000. To be certain of its GST registration status, a more thorough analysis of its turnover is necessary.

Perfect Plants Qtr 2 Budget. (Task 1)
Sales Revenue		$1,950,000
Cost of sales		$1,007,500
Wages		$200,000
Telephone		12,500
Travel		113,750
Office supplies		$18,750
Bad Debts		$37,500
Othe Operating Expenses		$31,250
Departmental Profit		$528,750

 

Perfect Plants Proposed Qtr 3 Budget. (Task 1)
Sales Revenue		$1,200,000
Cost of Sales		$620,000
Wages		$200,000
Telephone		$12,500
Travel		$70,000
Office Supplies		$18,750
Bad Debts		$37,500
Other operating Expenses		$31,250
Departmental Profit		$210,000

 

2: Negotiate changes to budgets and financial plans.

For this assessment task, you need to need to organise a meeting with three other stakeholders.

During the meeting, you will discuss Perfect Plants’ proposed budget for Quarter 3 and negotiate for the changes you identified in Assessment Task 1.

To complete this assessment task, you will need to arrange for three other people to attend your meeting. These could be people in your network who may have relevant workplace experience.

Your selected meeting participants will play the role of senior managers from Perfect Plants Pty Ltd.

Importantly, you will need to record your meeting and submit the recording file to your assessor. For ease of recording, we suggest you organise a virtual meeting using MS Teams or Zoom.

Please refer to the observation checklists to understand the criteria required to be fulfilled for the successful completion of this task.

Some important areas to be covered while discussing the budget:

• concerns identified in Task 1
• contingencies to overcome budget overruns
• negotiate for changes to the budget

Seek agreement from other stakeholders to amend the budget

3: Implement and communicate budgets and financial plans to the work team.

For this assessment task, you need to implement and communicate Perfect Plants’ Q3 budget to your team.

This task is divided into two parts, Part A and Part B.

Part

A. For Part A, you will need to update Perfect Plants’ Q3 proposed budget with the agreed changes discussed in Task 2.

For Part A of this task, you will need to update the Perfect Plants’ Q3 budget to:

1. Reflect the agreed changes discussed with stakeholders in Task 2.

2. Highlight your changes to the budget using the highlight functions in MS Excel.

3. Include an additional spreadsheet tab that outlines at least three contingencies for addressing potential budget overruns.

B. For Part B, you will need to arrange a meeting with four other people who will play the role of your work team at Perfect Plants Pty Ltd. During the meeting, you will present your updated budget and discuss what is required and how it will be achieved.

Importantly, you will need to record your meeting and submit the recording file to your assessor. For ease of recording, we suggest you organise a virtual meeting using MS Teams or Zoom.

Please refer to the observation checklists to understand the criteria required to be fulfilled for the successful completion of this task.

4: Monitor financial performance in line with the budget.

For this task, you need to analyse a financial statement relating to Perfect Plants’ Pty Ltd. actual performance in the mid-quarter.

Once analysed, you will need to write a draft email to the Perfect Plants finance team and advise on your teams’ financial performance.

5: Evaluate and report on financial performance for one reporting period.

For this task, you need to read a case study, analyse a financial statement relating to Perfect Plants’ PTY LTD end-of-quarter performance.

Once analysed, you will need to update your budget with the end-of-quarter results and record a video summarising the results.

Your video must be supported by a short PowerPoint Presentation.

Importantly, you will need to record your presentation and submit the recording file to your assessor. For ease of recording and sharing your PowerPoint slides, we suggest you use MS Teams or Zoom to record the presentation.

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