Prepare and Monitor Budgets SITXFIN004 Assessment 1 – Activity A Assessment 2 – Activity B Assessment 3 – Activity C

Unit of Competence: SITXFIN004 – Prepare and Monitor Budgets

ASSESSMENT ACTIVITY A – Case Study

Assessment Instructions:

Throughout this activity, you will prepare a budget for a charity ball according to the requirements provided throughout. You will also be required to:

• Consult on components of the budget
• Analyse factors that impact on a budget
• Complete draft and final versions of the revenue statement budget within designated timelines
• Monitor and review the budget against performance of its life cycle.

The structure of this assessment is made up of:

• Case study information
• Related tasks
• An excel document where all budget calculations will be made.

Please read the information provided then complete the tasks as instructed. At the end of the activity, the final excel document should be inserted as an object in the box below.

When using the excel document, all tasks should be completed on the relevant sheet and with the appropriate formulae and interlinks

Background Information:

Please read the following information:

You are currently the Operations Manager in the local Exhibition and Conference Centre, and have been appointed as the Project Manager for organising and running a charity ball. The ball however, will be held next door in the local town hall, as it is beautiful historic building with a large, vaulted ceiling in the main hall. The charity organisation for which you’re running the ball wants a black tie, gala event with music, dancing and entertainment, as well as a charity auction. The ball will be held on the last Saturday in October, and they hope to sell 500 tickets. You are responsible for organising the food and beverages for the night as well as a master of ceremonies, entertainment and music. The charity will source all items for the auction.

The overall goals are to hold a successful event and make a reasonable profit from the ball and the auction to assist them in their charity work. As part of the planning process you must prepare a series of budgets to help achieve these goals. Initially, you need to calculate expenses to determine the final selling price for the ball tickets. An initial estimated figure of $150 to $200 has been discussed. However, you must confirm if this is appropriate and what profits will eventually be donated to the charity as a result. You will report your initial budgets to an event committee comprising of representatives of the charity organisation and upper management. 

Task 1: Questions

Answer the questions below. Your answers should relate to the charity event outlined.

 

Q1:  What are the goals and objectives of this event?

Q2:  What budgets do you need to prepare to help you achieve these goals? Provide at least 5 answers.

1. 2. 3. 4. 5.

Q3:  Please research 4 factors, 2 internal and 2 external, and discuss how they could affect the budget performance.

Factor Impact 1)Internal       2)Internal       3)External       4)External

Q4:         What types of data or information do you need to assist in the preparation of your budgets? List 4 examples of types of data required and provide a web link of where you would go for research.

Information/data required Sources e.g. Prices – food and beverages Provide link to supplier/pricelist or other source

 

 

Background Information:

 

After conducting extensive research, you have sourced the following information to help you prepare an expenses and labour budget.

 

You have received quotes from suppliers for the following items in Table A:

 

Expense item	Quote ($)	Comments
Venue hire	3,500.00	Main hall and stage
Postage/stationery	350.00
Telephone	350.00
Event uniforms (F&B only)	750.00	Printed event t-shirt for service staff
Floral arrangements	3,900.00	6 x large stands, 42 x table centres
Lighting and stage hire	6,900.00	Stage, spot, dance floor
Audiovisual equipment hire	4,500.00	Microphones, data projector, screens, sound systems for entertainment
Equipment lease	1,790.00	Food preparation and service equipment
Master of ceremonies	800.00	6 hours including auction
Consultant fees	3,500.00

(Source: Table A)

 

 

 

Task 2: Calculate linen expenses

One of the expenses incurred will be for the hire of linen for the event. Open the excel template provided on page 5 of this assessment, and use the information provided to calculate the linen expenses.

 

 

 

Task 3: Prepare an expense budget

Based on the quotes provided by suppliers above and your linen calculations, prepare an expense budget for the event in your excel document.

 

 

 

 

Background Information:

All cooks, cooks’ assistants and food and beverage service staff will be hired through a hospitality labour hire company. The costs quoted by the company include all penalties, workers’ compensation, WorkCover and other on-costs. However, there is an additional overtime penalty of $10 per hour for all hours worked after the first eight hours of any given day.

 

You will need staff over a two-day period:

• Friday – for room set-up and food preparation
• Saturday – for the day of the event.

Job role	No. of staff	Rostered hours per person		Pay rate per hour ($)
		Friday	Saturday	Friday	Saturday
Cook A	2	8	8	30.00	35.00
Cook B	2	8	10	30.00	35.00
Kitchen assistant	2	6	8	20.00	25.00
Kitchen hand	2		8	20.00	25.00
F&B waiter A	7	8	8	25.00	30.00
F&B waiter B	16		8	25.00	30.00
Bar attendant	2	6	6	25.00	30.00
Bar attendant	1		9	25.00	30.00

 (Source: Table B)

 

In addition to labour hire costs, you employ two supervisors for the event. These are staff you have recruited personally and you pay a flat rate for the two days of $40.00 per hour. You anticipate they will both work 12 hours each day.

 

Security is also required on the night with two crowd controller/security staff employed through another staffing agency. You will need 24-hour security from 3 pm Friday due to some of the charity auction items being stored at the venue overnight. Their hourly rate is $40.00 on Friday and $50.00 on Saturday and Sunday. All rates are from midnight to midnight.

 

Job role	No. of staff	Rostered hours per person		Pay rate per hour ($)
		Friday	Saturday	Friday	Sat/Sun
Security A	1	3 pm to 11 pm	3 pm to 11 pm	40.00	50.00
Security B	1	11 pm to 7 am (Sat)	6 pm to 2 am (Sun)	40.00	50.00
Security C	1		7 am to 3 pm	40.00	50.00

 (Source: Table C)

 

Task 4: Calculate F&B labour costs

Using the information in Table B and your excel document, calculate the Total Food and Beverage wage costs incurred from the labour hire company for the event.

 

Task 5: Calculate total labour costs

Using the information in Table C and your excel document, calculate the Total Labour Costs for the event.

Background Information:

Additional information has now been gathered:

• A four-course meal with wine, beer, soft drinks and juices will be included in the ticket price.
• Meals will be served on a 50/50 basis except for the tapas appetiser, which is a shared platter. Beverages include a variety of red and white wines to match each course, bottled light and heavy beer, post-mix soft drinks and orange juice.
• Standard recipes have been costed for each course and an individual cost per serve determined.

 

 

 

Task 6: Calculate food costs

Calculate food costs including food cost per head, assuming 500 customers will buy the tickets and attend the charity ball. Do this in your excel document

Task 7: Calculate beverage costs

Calculate beverage costs including beverage cost per head in the excel document.

Background Information:

 

The event committee has asked you to prepare two alternative revenue statement budgets. The budgets will be based on two different ticket selling prices: $150.00 or $200.00. They wish to determine the most feasible and profitable alternative for their organisation.

It has also been decided that a specific percentage of ticket sales revenue is to be spent on additional expenses such as advertising, printing, decorating the venue and entertainment expenses for the event. These expenses need to be included in the revenue statement budgets.

Additional expenses	% of revenue
Advertising	1%
Printing	0.25%
Room decoration	3%
Entertainment	5%

Task 8: Prepare draft event budgets

Using the information provided, complete the Profit & Loss budget for ticket prices at $150 and $200 in your excel document.

Then answer the following questions:

Q1: Do you think either of the budget options presented meets the charity organisation’s stated goals? Please discuss.

Q2: What recommendations would you make to the event committee to help them achieve their goals?

Now that you have prepared your budget, you need send to your colleagues and manager for their review and input.

Prepare a draft budget email, save a screenshot onto a word document, then insert below.

 

 

 

Task 9: Negotiate final budget

You will need to discuss your results so far with the event committee and negotiate the final budget.

 

The meeting members will be Chair and Co-Chair of the event committee, you (Project Manager) and the F&B Manager or Head Chef.

 

You will need to:

• Prepare the meeting agenda.
• Follow the Actor Guide provided.
• During the meeting, agree on a follow up meeting after the event to review the performance against the budget over the project/budget life cycle.

 

 

 

 

 

Once the meeting is completed, insert your copy of the minutes in the box below.

 

Meeting agenda template

Meeting Minutes

(Insert as an object here)

 

 

 

Finally, send an email to all required departments after the final budget numbers have been decided on and insert the email below.

Background Information:

After meeting with the event committee and discussing potential methods of reducing expenses and maximising profits, the following decisions have been made.

 

• Ticket prices will be $175.00 per person unless profits are below $25,000 in the final budget.
• The advertising allowance is to be raised to 3% and printing to 0.5%.
• Entertainment expenses will remain the same at 5%. The band contracted to play during the meal has offered its services for free as a donation to the charity.
• Room decoration expenses will be increased to $3,000.
• Lighting and audiovisual expenses are to be decreased by $1,000 each.
• Linen hire expenses are to be reduced. Chair covers and overlays will not be used for the event.
• A major liquor supplier has offered to supply all wine for the event in return for acknowledgement on printed materials such as menus and posters.
• The catering equipment supplier to be hired for the event has also offered to supply all equipment free of charge for the same acknowledgements.

 

Expense	Amount $	Comments
August
Lighting hire	3,000.00	Deposit to secure booking
AV equipment hire	2,000.00	Deposit to secure booking
Room decorations	500.00	Deposit to secure booking
Advertising	500.00
Printing	95.00
September
Advertising	1,000.00
Printing	300.00
Entertainment	1,500.00	Deposit to secure booking
Venue hire	1,500.00	Deposit to secure booking
October
Food purchases	6,534.75
Postage/stationery	301.50
Telephone	300.00
Event uniforms	750.00	Paid in full on pick-up
Floral arrangements	3,900.00	Paid in full on delivery
Linen hire	1,758.00	Paid in full on delivery
Advertising	556.00
Room decorations	2,150.00	Paid in full on delivery
Entertainment	2,000.00	Paid in full on day of event
Venue hire	2,000.00	Balance paid on day of event
Master of ceremonies	800.00	Paid in full on day of event
November
Food purchases	1,290.45
Beverage purchases	545.90	$620.90 less returns
Labour costs	14,870.00	Payment in full
Postage/stationery	25.50
Telephone	95.00
Lighting hire	2,900.00	Balance paid on return
AV equipment hire	1,500.00	Balance paid on return
Outstanding invoices as at 15 November
Consultant fees	3,500.00	Invoiced 15.11, yet to be paid
Revenue: ticket sales
August	2,100.00
September	31,500.00
October	47,600.00
Payments still outstanding	2,100.00	One table not paid, invoice outstanding

(Source: Table D)

 

 

Task 10: Adjust and recalculate budgets

We must incorporate the changes into our budgets by recalculating or removing the items discussed. The final budget can then be presented to the event committee.

In your excel document, complete the linen and beverage adjustments.

 

 

Task 11: Prepare adjusted revenue statement budget

In your excel document, now complete the revenue statement budget based on the $175 ticket price and the new adjustments.

 

 

Task 12: Prepare final revenue statement report

The event has now been completed, so we need to prepare our final profit and loss report to evaluate budget vs. actual. Complete this task in your excel document.

 

 

Task 13: Prepare a cash flow statement

Using Source Table D and the case study update, please complete a cash flow statement in the excel document.

 

 

 

 

Task 14: Evaluation

After the event you have to prepare a presentation to the committee on the outcomes of the Gala Ball. This information should be collected and recorded to assist in future budget preparations.

 

You need to create a Power Point presentation comprising of a minimum 5 slides which demonstrate:

• Overall outcome of the event
• Significant variances, both favourable and unfavourable
• Recommendations for next time

 

Once completed, insert your Power Point presentation as in object in the box below. Your trainer will complete the observation checklist.

 

 

Power Point presentation

(Insert as an object here)

 

Observation Checklist

 

 

ASSESSMENT ACTIVITY B – KNOWLEDGE QUESTIONS

Answer the following questions giving as much detail as you can. You must use your own words wherever possible.

 

Q1: What is a budget?

Q2: Name 6 different types of budgets commonly used in the hospitality industry.

1) 2) 3) 4) 5) 6)

Q3: From the statements below, select those which can be used for budget preparation and monitoring practices and techniques:

Factor   Competitor research ☐ Customer or supplier research ☐ Declared commitments in areas of operation ☐ All information from every previous budget available ☐ Financial information from suppliers ☐ Financial proposals from key stakeholders ☐ Income and expenditure for previous time periods ☐ It’s a new budget, so only new information is relevant ☐ Departmental, event or project budgets ☐ Grant funding guidelines or limitations ☐ Only one person should prepare and monitor the budgets ☐ Management policies and procedures ☐ Organisational budget preparation guidelines ☐ Performance information from previous periods ☐

Q4: Explain what ‘financial commitments’ are. You must include 4 examples in your answer.

Q5: What are the three different types of ‘year’ used when preparing budgets? List their names and appropriate time period.

1) 2) 3)

Q6: Provide the definition of a variance in a budget. State 2 forms in which it can be displayed.

Definition: 1) 2)

Q7: Describe each of the different categories of expenses. Give one example of each category.

Fixed cost: Example:   Variable Cost:   Example:   Direct Cost: Example:   Indirect Cost:   Example:

Q8: A business wants to calculate food revenue for the month of July based on 75 seats and an average seat turnover rate of 0.75. The average spend per customer is $13.90. What are the total food sales for the 31-day budget period? (You must show your calculations.)

Q9: Last month a business spent $23,379 on food purchases and generated $73,059 revenue. Calculate the food cost percentage. (You must show your calculations)

Q10: What are six costs, other than gross wages or salaries, which should be included when calculating a labour budget?

1) 2) 3) 4) 5) 6)

Q11: List three factors that can affect cash flow in a business

1) 2) 3)

Q12: Why is it important to reflect organisational objectives within the draft budget?

Q13: State whether the following factors that can affect the impact budget development are internal or external.

Factor Internal or external Growth or decline in economic conditions   Human resource requirements   New legislation or regulation   Organisational and management restructures   Organisational objectives   Scope of the project   Shift in market trends   Significant price movement for certain commodities or items   Supplier availability and cost

Q14: Name the 2 basic formats that any budget can be prepared in.

1) 2)

Q15: There are different types of forecasters – realists, pessimists and optimists. Explain how a realist would create a budget.

Q16:   Why is it important to discuss and negotiate outcomes amongst your team prior to finalising the budget?

Q17: How can you ensure the final budget is completed within designated timelines?

Q18:  What are the five steps followed when monitoring and reviewing budgets.

1) 2) 3) 4) 5)

Q19: A business forecasted $250,000 sales but actual sales for the period were $235,200. What is the variance and variance percentage?

Variance $ = Variance % =

Q20: Are the following deviations favourable or unfavourable results?

1)    Wages are $23,000 above budget = F or UF 2)    The variance percentage for bus tour sales is 11.2% = F or UF 3)    The budgeted figure for cost of goods was 35%. The actual figure for cost of goods for the month is 36.2% = F or UF

Q21:  A business’s laundry costs are $1,450 below budget. What is a possible cause for this deviation?

Q22:  Briefly explain how the features and functions of accounting software programs assist you in managing budgets.