Review the Master Budget and Cost Centre Budgets Prepared by The Senior Accountant - Management Assignment Help

Assignment Task:

Task:

Task A 
The Sales General Manager. Sam Geller, has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the 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 with her. 
Information you are aware of includes:

• Sales in the first quarter (01), third quarter (03), and the fourth quarter (04) are generally 30% less than the second quarter (02). • Safes in 02 depend on completion of 90% ol repair and maintenance.

• Safes for 02 have been estimated to be $1,000,000.

• Commission negotiated with members of the sales learn is now at 2.5%. 
 

Task B 
It has come to the attention of the Managing Director. Tom Copeland, that due to the current economic climate, sales volume may be 20% below target this financial year. Tom is worried that this may severely impact profit projections. The company can accept as much as a 10% variance in profit projections; however, more than this could severely affect the company's ability to pay obligations and invest. Reliable data to determine whether the risk has eventuated should be available by mid 02, when sales data for the company's product are in. As a special project, the Managing Director has asked you to perform a risk assessment and develop a contingency plan to manage the risk of sales falling 20%. As per organisational policy you should use the contingency plan template provided. 

Budget preparations

• The business plan will set the key parameters for all financial budgeting.

• Variations to the business plan must be approved by the CEO and senior management strategic committee.

• Prior period results are to be analysed to identify the profit level of cost centres, identify correlations between financial statistics and to set key performance indicators and benchmarks for future budgets.

• The budget planning committee will meet prior to budgets being developed and agree on budget parameters. The committee will consist of all department managers plus the CEO and CFO.

• A CAPEX budget will be developed from the approved business plan.

• A detailed sales budget must be completed before completing the profit budget for the year.

• A cash flow budget covering the first three months will be prepared after the profit budget is completed.

• A master budget including profit projections will be completed from which cost centre allocations will be made.

• Budget notes that contain all the assumptions used in the budgets should accompany the master budget or be made available as a separate document. Where possible, the notes should justify the basis on which the estimates were made.

• Overheads (non-direct expenses) will be appodioned across the cost centres equally. Exceptions need to be negotiated with relevant authorities.

• All expenses and income will be spread equally throughout the year unless otherwise required by business needs or business environment. 
 

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