SIT40516 - Certificate IV in Commercial Cookery

Full Name: RAKESH

Student ID: 200137

FINANCE -MANAGE BUDGETS

SITXFIN003 – Manage finances within a budget

SITXFIN004- Prepare and monitor budgets

STUDENT ASSESSMENT ANSWER BOOKLET

Assessment Task 1- Written Questions

QUESTION 1

Provide an outline of what a master budget is and what it contains.

ANSWER: A master budget is a comprehensive financial planning document that includes

all the lower-level budgets such as cash flow, finical statements, and financial plans of an
organization. It is usually developed by a firm's budget committee guided by the budget
director (Bužinskienė, 2019).

QUESTION 2

Identify the four basic financial reports and outline their purpose and content.

ANSWER: there are four main financial statements which are:

balance sheet- in the snapshot- assets, liability, owner’s equity

income statements- the period of time that the statement covers is chosen by the business.

cash flow statement

statement of shareholders

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 3

Provide a brief summary of the purpose of each of the following budgets:

Cash/Cash flow The cash flow budget shows a company’s cash inflow and outflow
budget during a specified budget period which can be a month, quarter, or
year.

Departmental A departmental budget is a department level financial plan that lays

budget out spending for the upcoming quarter or fiscal year.

Event budget A budget is a detailed forecast of what will be happening financially at

your event. It helps control your expenses and revenues and measures
the success of your meeting or event performance.

Project budget A project budget is the total amount of monetary resources that are
allocated for particular goals and objectives of the project for a
specific period of time.

Purchasing A purchase budget is created to keep track of the company's inventory

budget value and the number of goods sold. It also is used to help you keep
track of your desired ending inventory value each month.

Sales budget The objective of the sales budget is to plan for and control the
expenditure of resources necessary to achieve the desired sales
objective.

Wage budget. Money designated over a specific amount of time, with which to pay
salaries. When structure adjustments or individual employee
adjustments are being planned, the sale budget must be taken into
consideration.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 4

Identify the purpose of the following financial records:

A deposit slip is a small piece of paper from that a bank

customer includes when depositing funds into a bank account.
Bank deposit
The deposit slip serves as proof that the bank acknowledges
documentation
receiving the funds from the customer.

Bank statements Bank statements show if the bank is accountable with an account
holder’s money. Bank statements are a great tool to help account
holders keep track of their money.

Banking summaries The bank account summary shows the up-to-date positions of
your finances in the business represented by cash in the bank,
credit cards, loans, and petty cash.

Business Activity Activity statements are issued by the ATO so that businesses can
Statements report and pay a number of tax liabilities on the one form at the
one time.

Cheque books A cheque book is a booklet of paper Cheques that can be used to
pay someone using the funds in your transaction account.
Typically, a cheque book can be ordered through your bank and
linked to an existing bank account.

Credit card transaction It is a summary of how you’ve used your credit card for a billing
statements period. If you don’t, you may end up with more credit card debt
than you can handle.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Journal entries It is a record of transactions listed as they occur that shows the
specific accounts affected by the transaction. They provide
important that is used by an auditor to analyze how financial
transactions impact a business.

Labour and wages Information about the wages and salaries paid to employees is
report used for many purposes including economic analysis, social
research, policy formation, and evaluation by employer and
employee associations.

Merchant statements The purpose of a merchant statement is to understand the income

and expenses and analysis how much are your base costs and
mark-ups and how you can lower them and stay competitive.

Merchant summaries The merchant summary report provides the total numbers of
transactions and total amounts processed for each gateway
account associated with your merchant account.

Transaction reports. The primary purpose of transaction reports is to detect and

investigate suspect market abuse, insider trading, and market
manipulation. Identify scenarios of market abuse and the
importance of transaction reporting to the prevention of financial
crime.

QUESTION 5

What are the requirements for a tax invoice in Australia?

ANSWER: Suppliers, your business, identify, name and address, and ABN

invoice number

date of transaction

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

description of what is sold or item number

sale price and quantity

GST and terms of payment.

QUESTION 6

Research three common accounting software applications that small businesses use and
summarise their functions and features.

ANSWER: The function the features so you have to look for example, QuickBooks, Xero or
Reckon or MYOB.

Quick books: This version of QuickBooks is considered one of the most comprehensive
financial management solutions for small and mid-sized businesses, as well as enterprises.

Simply put, if you want more than five and up to thirty users to work on the software at the
same time, QuickBooks Enterprise is what you need. you are looking for a business
accounting solution, there are many reasons why QuickBooks deserves to be your first
choice.

This software comes in different versions such as QuickBooks Pro, Premier, Enterprise, and
Accountant. Specific to your business accounting needs, QuickBooks has a solution. But
which version will be best suited for your business Knowing this is very important before you
make the required choice. Before moving on to the specific business users of QuickBooks
Enterprise, let’s know more about this software in brief.

Features of QuickBooks:

Ease of Managing Reports and Finances, Quick and Easy Inventory Management, Easy to
Define User Roles and Permissions

Reckon :

The base software includes the following functions and features:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Multi-layered data security and SSL encryption, Automatic data backups

Share your data with your accountant or bookkeeper.

See cash flow in real-time, Unlimited bank reconciliations.

Xero’s features are:

Budgeting and financial reporting, Sales quotes, Multi-currency, File storage, Contacts and
smart lists for customer relationship management, Fixed assets, Sales tax, Purchase orders

QUESTION 7

Describe three techniques commonly used for making estimates of expense budgets.

ANSWER: estimates of budget could be Estimate cost. Based on previous data Projection
based on quotation. All factoring and inapplicable external factors such as competition,
interest rate, state of the economy.

Factoring in applicable internal factors

Percentage of sales. analysis by time period that is Weekly, monthly or quarterly.

QUESTION 8

Identify and outline the steps in the accounting cycle.

ANSWER:

The eight steps of the accounting cycle include the following:

Step 1: Identify Transactions.

Step 2: Record Transactions in a Journal.

Step 3: Posting.

Step 4: Unadjusted Trial Balance.

Step 5: Worksheet.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Step 6: Adjusting Journal Entries.

Step 7: Financial Statements.

Step 8: Closing the Books.

QUESTION 9

Give three examples of negative changes in the internal organizational environment that may
have to be taken into account when reviewing budgets with a view to making necessary
changes.

ANSWER:

high volume of workplace accidents indicating need to increase training and need to replace
faulty and dangerous equipment would be staff unrest or absenteeism, where workers are
unhappy with the wages they are receiving.

Producing are not up to standard or in it can be dangerous or defective.

would be a lack of fund for working capital that indicates need to refinance.

No well feedback.

QUESTION 10

Budget formats can vary between organizations and accounting programs: list two ways a
negative situation can be indicated in figures on a budget.

ANSWER:

In red
In brackets
And with minus sign.

QUESTION 11

Discuss the role of a budget and financial reports for a business.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

ANSWER:

a budget and financial report for business would be budgets or common financial tools used
to manage and control a company's finances. A budget usually has forecasted expenditure
and income and then itemized actuals across the calendar or fiscal year.

The role of budget is in allocating of resources, determine the direction, assign responsibility
which is completed in fixed limit, provide the framework for evaluating performance against
cost, and forecast the outcome of the company.

The purpose of a budget is to help a business make decision Control cost and hence
profitability or monitor performance and identify they are making profits or not.

a budget actually is like a controlling or to monitor and guide if you're on the right track.

Financial reports are also produced to meet legal and compliance

The role of financial reports is to know the financial activities and financial condition of the
company.

QUESTION 12

Discuss how changes in legislation can impact on a budget. Give three examples of
legislation changes in the last decade that have had an impact on the hospitality industry and
the profitability margins.

ANSWER: Changes in safety and standards of food, changes in work health and safety.
changes to the Fair Work Act and the National Employment Standard impacting on payrolls
on public Holidays and weekends and dismissals local blows the hospitality award, Changes
in wages act, changes in equal work opportunity act.

QUESTION 13

Discuss how a hospitality business might manage and recover its profit margin in a downturn
in the economy.

ANSWER:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Create a strategy partnership, Additional market, compete with competitors, loyalty program,
Additional revenue, Unbundle, Discount rates

QUESTION 14

Identify five internal sources of information that may be used as a basis for preparing a
budget and forecasting income and expenditure.

ANSWER: expenditure information from previous period.

Financial commitments such as loan rent and lease payment, overhead, labour.

sales figure from the same period last year Forecasting, and organizational guideline for
budget preparation.

QUESTION 15

Identify five external sources of information that may be used as a basis for preparing a
budget and forecasting income and expenditure.

ANSWER:

the research on competitors, customer research, financial proposals from stakeholders, do

market research, Grand funding, Government legislations, statistical information

QUESTION 16

Identify and briefly summarise the four stages of a budget cycle.

ANSWER:

The budget cycle consists of four phases

(1) preparation and submission

Review the assumptions about the company's business environment that were used as the
basis for the last budget, and update as necessary. Determine the capacity level of the primary
bottleneck that is constraining the company from generating further sales, and define how this
will impact any additional company revenue growth.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Determine the most likely amount of funding that will be available during the budget period,
which may limit growth plans. Determine whether any step costs will be incurred during the
likely range of business activity in the upcoming budget period, and define the amount of
these costs and at what activity levels they will be incurred

(2) approval of the budget

The budget approval is a process when annual estimates of public revenues and expenditure
made by governments acquire a status of a legal act after discussion and voting in parliaments

(3) execution of the budget

The budget execution process generally follows five steps: Monies are released to various
line ministries as per the approved budget. Agencies initiate expenditures directly or by
procuring goods and services. Payments are made for these expenditures.

4) audit and evaluation of the budget.

Budget evaluation refers to the final stage of the budget cycle when there is an assessment of
whether public resources have been used appropriately and effectively. CSOs can engage in
and strengthen the Budget evaluation process using the following methods: Audit Analysis
and Engagement » Impact Analysis »

QUESTION 17

a) Define the following options and approaches to budgeting:

 Incremental budgeting

ANSWER:

The incremental budget is prepared by taking the actual performance and the current year
budget as a base for adding the amount to a new budget. The incremental budget will require
updates for the things like inflation, a planned increase in cost, and sale price.

 Zero-based budgeting.

ANSWER:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Zero based budgeting is not based on previous year budgets. In this approach, the preparation
of the budget is starts from zero. The evaluation of every expense is made before adding it to
the final budget. The process of zero based is started from zero. The analysis is made for the
need and costs of the organization. The budget is prepared for knowing the need of the
upcoming period.

b) Why are ‘rolling budgets’ useful in the hospitality industry?

ANSWER:

The rolling budget allows an organization to respond quickly and manage resources
according to change in need of the economy. Many of the businesses are implementing
rolling forecasting. It helps in reducing the uncertainty of budget and accurate planning and
controlling of activities. Rolling budget plans is for the near-term future instead of the long
term. It tells management in knowing the movement of the company in terms of profit and
sales.

QUESTION 18

Complete the following table to differentiate between the ‘top down’ and the ‘bottom up’
approach to negotiating budgets.

Description Advantage/s Disadvantage/s

Top In top down, The feature of the The motivation is decreased

down negotiation budgeting budget is to overall as a person who is
increases the corporate functional as responsible for the
involvement of lower- senior management is implementation of the
level managers which concerned with an budget is not there in the
help in preparing overall growth of an budget making process.
realistic target. organization.

Bottom The bottom level It increases the In bottom-up approach will

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

up negotiation budget ownership of budget by result in a higher spending

encourages management as it target in comparison to top-
commitment to the plan increases the down approach.
by involving those who understanding, and
are responsible for the commitment by
implementation of the managers.
budget.

QUESTION 19

Aside from income and expenditure, list seven different types of financial factors/results that
may be forecasted in a hospitality budget and actuals reported.

ANSWER: Here are some factors that need to be considered for Current Industry Conditions.

Budget is cash flow, Conversion financial return

Equipping rates and finish working.

Performance of particular Department or service.

Sales performance sales return, stock levels.

QUESTION 20

Food wastage is an unknown cost in Australia. One thing for sure that we know is that the
cost is escalating quickly. Explain what a restaurant might calculate or consider in relation to
waste when preparing financial and statistical reports. Give three examples.

ANSWER: Keep an eye on overproduction. Measure food waste, predict food orders,
Engage staff, Practise good stock control

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 21

Explain what yield management is in relation to a hotel. Why is yield management

important?

ANSWER: Hotel Yield Management involves selling the right room to the right customer at
the right time. Since competitor price, customer preferences, budgets and demand levels keep
changing, a variable pricing strategy also called as dynamic pricing is used to tweak room
rates in accordance with the said factors, Yield management is a pricing strategy and a
function of the supply and demand economy. It's particularly important and useful in the
hospitality industry. This reduces the likelihood of lost revenue and can help hospitality
businesses manage their product and revenue streams, even when demand varies

QUESTION 22

Forecasted room revenue calculations are based on the number of rooms available, the
number of operating days, the average room rate, and the forecasted occupancy. Calculate the
room revenue (to the nearest dollar) using the data in the table below.

Number of
Forecast Average Operating Forecasted room revenue
rooms
occupancy Room Rate Days p/year (sales)
available

Example:
75% $105 365 $3,506,737
122

50 62% $90 310 62%of 50=31×90×310=$864900

15 98% $86 365 98%of15×86×365=461433$

300 89% $220 365 89%of300×220×365=21440100$

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 23

Working out how much to charge for food and drink.

a) Calculate the cost of a drink of vodka and soda (before taxes):

 You will need the following to make one drink - 0.03L of vodka, 0.1L of soda, 0.02
kg of lime, and one straw.

 A liter of vodka costs $12.00, a liter of soda water costs $1.00, a pack of 140 straws
costs $3.00 and 1kg of limes is $2.00. If 0.03L of vodka costs $0.36 work out the cost of the
soda water, a slice of lime, and one straw.

 What is the cost of the drink (ingredients only)?

 If you wanted to make 500% on the drink how much would it be?

 ANSWER: The cost of the drink is 2.42$

 If 500% profit is needed then it would be 12.1$

b) What other costs may you have to calculate into the cost of this drink? List three
suggestions.

ANSWER: Production costs

For service charges

For making charges

c) If half of the bag of limes were thrown out after being cut and not used, what is the
cost of the waste?

ANSWER: If the half of the likes were thrown, wastage would be 1$

QUESTION 24

What are the three different ways that a statistical/financial report can show variances?

ANSWER: Cost Variances. Profit Variance.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Material Variances, Labour Variances.

Overhead (Variable) Variance. Fixed Overhead Variance.

Sales Variance.

Assessment Task 2- Case-Study

INSTRUCTIONS

Read the case study below and answer all questions correctly.

Budget review

You are an Operations Manager with Marino Enterprises and oversee the operations for six
of the venues. John Marino has asked you to monitor and review specific budget figures for
two businesses as presented below and present an analysis of their meaning for the
organization.

The management team is keen to identify issues that need to be addressed based on an
analysis and review of the budget data in order to optimize the viability of the business
while retaining market share, market position, and their high product and service standards.

You have been presented with the following information:

Property 1

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Selected budget data

Item Projected/Budgeted figure Actual figure

Room Sales 20,000,000 12,000,000

Food sales 5,000,000 9,000,000

Liquor sales 3,000,000 5,000,000

Wages 2,100,000 2,500,000

Rent 1,000,000 1,200,000

Overheads 500,000 450,000

Property 2

Six month’s total sales figures

Month $ Budget $ Actual

July 50,000 49,300

August 54,000 56,970

September 58,000 66,160

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

October 62,000 65,500

November 66,000 67,570

December 70,000 69,040

QUESTION 1

Use a spreadsheet program to calculate and facilitate the development of final figures for
Property 1 as follows:

Calculate the dollar deviations for room sales, food sales, liquor sales, wages, rent, and
overheads.

Calculate the percentage deviations for room sales, food sales, liquor sales, wages, rent and
overheads.

Indicate if the identified deviations are positive or negative.

ANS:

Property 1

Selected budget data

Projected/ Actual deviation deviation Nature of

Item
Budgeted figure figure % deviation

Room 20,000,000 12,000,000 (8,000,000) (40%) negative

Sales

Food sales 5,000,000 9,000,000 4,000,000 80 % positive

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Liquor 3,000,000 5,000,000 2,000,000 66.67 % positive

sales

Wages 2,100,000 2,500,000 400,000 19.05 % negative

Rent 1,000,000 1,200,000 200,000 20 % negative

Overheads 500,000 450,000 50,000 10% positive

QUESTION 2

Use a spreadsheet program to calculate and facilitate the development of final figures for
Property 2 as follows:

 Total the budgeted and actual sales for the 6 months.

 Calculate the dollar deviations for sales on a month-by-month basis.

 Calculate the percentage deviations for sales on a month-by-month basis.

 Calculate year-to-date budgeted totals for sales on a month-by-month basis.

 Calculate year-to-date actual totals for sales on a month-by-month basis

 Calculate the dollar deviations for YTD figures on a month-by-month basis

 Calculate the percentage deviations for YTD figures on a month-by-month basis.

ANS:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

MONTH BUDGE ACTUA $ % YTD YTD +/- & % +/-

T$ L DEVIATIO DEVIATIO BUDGETIN ACTUAL
N N G

JULY 50,000 49,300 (700) (1.4%) 50,000 49,300 -700 -1.4%

AUGUST 54,000 56970 2970 5.5% 1,04,000 1,06,27 2,270 2.18

0 %

SEPTEMBE 58,000 66,160 8160 14.07% 1,62,000 1,72,43 10,43 6.43

R 0 0 %

OCTOBER 62,000 65,500 3500 5.64% 2,24,000 237,930 13,93 6.21

0 %

NOVEMBE 66,000 67,570 1570 2.37% 2,90,000 3,05,93 15,50 5.34

R 0 0 %

DECEMBER 70,000 69,040 (960) (1.39%) 360,000 3,73,07 13,07 3.63

0 0 %

QUESTION 3

For Property 1 suggest four possible causes for the variation in room sales.

ANS: Promotion run by competitors at same time, Poor hygiene, Bad customer service
Economic downturn
Reviews and feeds

QUESTION 4

For Property 1 suggest four possible ways to manage the variation in room sales.

ANS: Increase promotional activities

Refurbish rooms, Adjust your budget
Revise room rates to be more competitive
Bundle with breakfast and dinner
Improve customer service

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 5

Identify four possible causes of the results for food sales in Property 1.

ANS: Changes in food menu style

Good hygiene
New well trained kitchen staff, Good chef
Good customer service

QUESTION 6

There is no need for you to investigate the ‘wages’ deviance: why might this be so?

ANS: If deviation is less than 20%

Pay rise based on industry agreement
Maybe management hiked the wages by 15%

QUESTION 7

In late June Property 1 undertook a major advertising campaign that had been factored into
budgets for July: given the actual results for July, what action might you suggest to
management?

ANS: Change the menu, change advertisement strategies and switch to direct marketing,
Change the mode of advertisement like Tv and radio and online, Revise the standards of the
menu

QUESTION 8

Why would you want to conduct a major investigation into sales for September?

ANS: because sales were in September has a drastic change and huge profit, under
investigation only we can find out how they managed to bring that much sales.

QUESTION 9

The organization has found out that other businesses in the chain had shown a 6% positive
variation in actual sales against budgeted revenue figures: list three suggestions on what
might you do about this?

ANS: Promotional offers

How they manage the kitchen

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Any difference in ambiance

review Their budget
Feedback
How they prepared food

QUESTION 10

How might you research internal factors impacting the figures you have been given? Give
three suggestions.

ANS: Preparation and operation

Review the customer feedback, talk to all staff

Talk to all customers and ask them feedback, Observe and monitor

QUESTION 11

What could you do to research external factors impacting the figures you have been given?
Give five suggestions.

ANS: Speak with industry body hotel, motel, restaurant association.

Monitor media and listen news, talk to operates of the venues

Speak with official from government agencies.

QUESTION 12

List five internal source documents that you would need to refer to in order to determine
profit performance for the food and beverage areas.

ANS: Check staff wages,

rosters

Pretty cash book

reservations

Statement of purchase orders

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Question 13

Which colleagues and managers might you need to share these findings with? Give five
suggestions.

ANS: The owners

The Managers, Board members, Joint venture parties

The senior level

Executive management

Departmental managers

Question 14

You briefly consider reducing staff numbers as a way of improving profit but reject the idea:
what reasons might be behind this thinking?

ANS: Work load of staff will be overload

Quality of service will be decreased.
Customer waiting time will increase.
Customer service gets affected

Assessment Task 3 – Financial and Statistical Calculations

QUESTION 1

Calculate Cost of Goods Sold for a bar given the following information:

 Opening stock for the bar: $30,000

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

 Closing stock for the bar: $25,000

 Requisitions to the bar: $125,000

ANS: Cost of goods sold= opening stock of bar+ requisition of bar- closing stock of the bar

Cost of goods sold= $30000+$125000-$25000=$130000

QUESTION 2

What is the Percentage Cost Factor for the following?

 Cost of Goods Sold: $17,800

 Revenue: $41,786.

ANS: Percentage Cost Factor = cost of sale/revenue *100

Percentage Cost Factor=$17800/$41786*100=42.6%

QUESTION 3

What is the Gross Profit for the following?

 Cost of Goods Sold: $55,962

 Revenue: $134,000

ANS: Gross profit = revenue- cost of goods sold

Gross profit = $134000-$55962=$78038

QUESTION 4

Calculate Percentage Mark-Up for the following:

 Revenue: $15,000

 Cost of Goods Sold: $6,934

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

ANS: Percentage Mark-Up= Revenue- COGS/COGS*100

Percentage Mark-Up=$15000-$6934/$6934*100=116.32%

QUESTION 5

What is the Return on Proprietor’s Funds given the following?

 Owner’s funds: $1,200,000

 Nett profit: $365,500

ANS: Return on Proprietor’s Funds= owner’s fund/ net profit

Return on Proprietor’s Funds=$1200,000/$365500*100=30.1%

QUESTION 6

Calculate Current Asset Turnover Ratio (expressed as a percentage) from the following:

 Average current assets: $2,000,000

 Sales: $350,680

ANS: Current Asset Turnover Ratio= sales/ average current assets*100

Current Asset Turnover Ratio=$350680/$2000,000=1.75

QUESTION 7

What is the Gearing Ratio based on the figures below (expressed as a percentage)?

 Average liabilities: $450,999

 Average equities: $2,150,000

ANS: Gearing Ratio= Average liabilities/ Average equities*100

Gearing Ratio=$450999/$2150000=0.20

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

QUESTION 8

Calculate the Working Capital Ratio for the following:

 Current assets: $805,000

 Current liabilities: $1,450,000

ANS: Working Capital Ratio= Current assets/Current liabilities

Working Capital Ratio=$805,000/ $1,450,000=0.55

QUESTION 9

What is the Quick Asset Ratio (expressed as a formula) for the following figures?

 Current assets: $2,000,000

 Stock: $55,000

 Current liabilities: $1,300,000

 Bank overdraft: $45,000

ANS: Quick asset ratio = 2,000,000-55000/1,300,000-45000=1.54

QUESTION 10

What is the Proprietary Ratio (expressed as a percentage) given the following?

 Total proprietorship: $375,000

 Total assets: $1,500,000

ANS: Proprietary Ratio= Total proprietorship/ Total assets*100

Proprietary Ratio=$375,000/$1,500,000=0.25

QUESTION 11

Calculate the gross profit margin percentage for the figures below:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

 Sales: $ 2,457,983

 Gross profit: $890,816

ANS: Gross profit margin= Gross profit/ Sales*100

Gross profit margin=$890,816/$ 2,457,983*100=36.24%

QUESTION 12

Calculate room occupancy percentage from the following:

 Total rooms available: 1205

 Rooms occupied: 378

ANS: Room occupancy percentage= Room occupied/ Total rooms available*100

Room occupancy percentage=378/1205*100=31.36%

QUESTION 13

What is the average room rate for the following?

 Room revenue: $66,450

 Total rooms available: 524

ANS: Average room rate= Room revenue/ Total rooms available

Average room rate=$66450/524=126

QUESTION 14

The following ratios are used to judge the financial stability of a business: identify if the
following are used to determine the short- or long-term financial stability of a business.

Name of ratio Short-term or Long-term

Quick asset ratio Short term financial liability

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Proprietary ratio Long term financial liabilities

Working capital ratio Short term financial liabilities

Interest coverage Long term financial liabilities

QUESTION 15

If your working capital ratio went from 2 to 1, would that generally be seen as a positive or
negative movement?

ANS: If the working capital has been shifted or decline by 2 to 1 that means the company
liquidity is not sound that indicate negative movement.

Question 16

Your gearing ratio has moved from 0.5 to 1.0: is that generally regarded as a Positive or
Negative movement?

ANS: If the gearing ratio has been increasing by 0.5 to1.0 that show high proportion of debt
to equity, it shows negative movement.

QUESTION 17

Your analysis of labor costs indicates negative deviations: what might you suggest to
improve this situation?

ANS: Reduce labour costs by optimizing schedules.

Reduce employee turnover and increase productivity.

Incentivize performance

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Provide employees with predictable work schedules.

Reduce pay overages.

Assessment Task 4: Project

INSTRUCTIONS

PART A

You are the manager of a small bed and breakfast owned by Marino Enterprises. Comfy Inn has
located in country Victoria and was purchased by the company two years ago when the long-term
owners decided to sell. The B&B was sentimental to John Marino and Betsy Smith as they used to
stay there in their younger days. When it came onto the market, they snapped it up.

Some background on the B&B – they are a small luxury homestay property that offers seclusion,
privacy, and romance for an adult's only stay. There are three cabins onsite; each fully contained.
They provide a full breakfast in the main house and a full bar that is open for drinks and canapés
from 4 pm – 6 pm on Friday, Saturday, and Sunday afternoons. The bar is open at other times for
snacks, coffee, tea, smoothies, soft drinks, and alcohol purchases.

Marino Enterprises looks after the property grounds and the manager’s wage. Everything else is the
responsibility of the manager who resides onsite in the main house. Your partner is employed as the
short order cook and you pay a casual cleaner. As part of the onsite manager’s role, you and your
partner complete the general housekeeping duties when it is quiet.

It is budget preparation time and Betsy has asked you to meet with her to discuss the details.

Betsy has provided you with last year's actual revenue received, broken down into accommodation,
food, and beverages.

REVENUE BUDGET – ACTUAL for 2015-2016

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Comfy Inn B&B

LAST YEAR

Accommodatio Food Beverages

TOTAL
n

July 3,000 1,600 1,560 6,160

August 2,800 1,800 1,600 6,200

+
2,800 1,800 1,900 6,500
+September

October 3,600 2,400 1,800 7,800

November 3,800 3,000 1,960 8,760

December 6,000 3,800 1,700 11,500

January 8,800 3,800 1,600 14,200

February 8,800 4,000 1,600 14,400

March 3,800 3,400 1,400 8,600

April 3,600 2,600 1,200 7,400

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

May 3,400 2,400 1,400 7,200

June 3,200 1,800 1,500 6,500

TOTAL $53,600 $32,400 $19,220 $105,220

1. You will now meet with Betsy (role played by your assessor). She will provide you
with the instructions for preparing your budget and allocating costs.

You will be required to actively participate in the meeting and take notes on the detail
provided (by your assessor in the role of Betsy). Have this assessment work sheet with you to
record the details and be prepared to ask questions to clarify the information provided.

Your assessor will give you details on when this meeting will be held.

In the meeting, you will need to confirm (take notes as required) the following:

What budget you are responsible for.

ANS: As per the situation there, is a need for all the relevant budgets, like material (food
item) required for business, operations. There is also required the master budget in hand for
discussion with the assessor, so he will be able to review all the relevant information, and
contribute in a meaningful form.

The increases Betsy has directed you to include into the projected income budget for the next
year.

The increases Betsy has directed you to include into the projected income budget for the next
year.

Accommodation

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

ANS: 5% increase across the board of last year

 Food prices

ANS: 5% increase on last year

Beverage prices.
ANS: 10% increase on last year.

Betsy will also give you some extra considerations during your meeting. Make note of them:

A sales campaign designed to attract people to the B&B for a relaxing weekend, to escape
the hustle and bustle of city life will be rolled out over January, February, and March, and
you (the assessor in the role of Betsy) have calculated that this should increase sales by 10%
across those three months for accommodation, food, and beverage sales. This 10% should be
calculated on the increased price. (January income $8800 x 5% increase = $9240 + 10% =
$10,164).

1. Betsy has also provided you with the following expenditure information that you will need
to consider when preparing your cash flow budget. This data has been sourced from historical
data, committed costs for the B&B and Marino Enterprises policy:

Marino Enterprises’ overheads are $2000. All individual businesses and departments pay this
overhead in August of each year.

Lease payments are $1,500 monthly.

Combined insurance coverage to increase to $1,400 per year paid in two equal payments in
March and September.

General repairs and maintenance to the property of $4,800 pa to be budgeted monthly.

Digital marketing and advertising costs will be $2,400 pa, payable monthly.

Charges for out-sourced laundering are $800 per month.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Electricity charges are payable every quarter as follows:

 September: $2,200

 December: $2,000

 March: $2,400

 June: $3,000.

General monthly miscellaneous expenses amount to $600/month.

You also know from your experience and the management of the property that:

You need to replace some linen and towels at the cost of $2000 and replace kitchenware
consumables to the value of $1000 at some point in the year. You will need to decide when it
is best to include this expenditure in your budget along with an explanation to Betsy as to
why you think it is best budgeted for in those months.

The monthly cost of F&B stock is predicted to run at 40% of the food and beverage sales.
You will need to calculate this cost into your projections.

The cost of labor is calculated at 25% of all monthly sales. You will need to calculate this
cost into your projections.

2. Betsy has asked you to enter the income and expenditure data she has given you plus your
projections into your accounting system to prepare the draft revenue budget for the upcoming
year. You may use an accounting software package or alternatively you could use a Microsoft
Excel (or similar software) spreadsheet. If you use spreadsheet software make sure you use
the headings: income, cost of sales, gross profit, expenses, and operating profit. Enter the data
with 0 decimal places.

a) Prepare an email that you can send to the other managers at the B&B, and John
Marino seeking their input and feedback. Attach your draft budget and ensure that you
provide them with enough information so that they can make a judgment of how and why you
have allocated funds as you have. Submit this email to your assessor as if they were one of
the managers.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

ANS: Email to Betsy:

Print a copy of your draft budget and submit it to your assessor (in the role of Betsy) along
with a memo explaining:

 The extra expenditure for discussion and approval (beds and kitchen appliances)

The extra expenditure for approval is linen and towels at the cost of $2000 and kitchenware
consumables to the value of $1000.

 A discussion on the internal and external factors that could have an impact on the budget.

ANS:

Accoun Tot Jul Aug Sep1 Oct1 Nov Dec Jan16 Feb1 Mar April May June1
t name al y1 16 6 6 16 16 6 16 16 16 6
sal 6
es
Accom 58, 31 2940 2940 3780 3990 6300 10,16 10,1 4389 3780 3570 3360
modati 52 50 4 64
on 7
Food 35, 16 1890 1890 2520 3150 3990 4389 4620 3927 2730 2520 1890
19 80
6
Bevera 20, 16 1680 1995 1890 2058 1785 1848 1848 1617 1260 1470 1575
ges 66 38
4
Total 11 64 6468 6825 8190 9128 1207 16401 1663 9933 7770 7560 6825
income 4,3 68 5 2
87
Less
cost of

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

sales
Stock 22, 13 1428 1554 1764 2083 2310 2495 2587 2218 1596 1596 3360
34 27
4
Gross 51 5082 5271 6426 7115 9765 13906 1404 7715 6174 5964 1890
profit 41 5
Less
expens
es
Over 2,0 2000
head 00
Adverti 2,4 20 200 200 200 200 200 200 200 200 200 200 200
sing 00 0
Laundr 9,6 80 800 800 800 800 800 800 800 800 800 800 800
y 00 0
Electric 96 2200 2000 2200 3000
ity 00
insuran 14 700 700
ce 00
Propert 18, 15 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
y lease 00 00
0
Linen 2,0 2000 3000
and 00
towels
Kitchen 1,0 1000
ware 00
Repairs 48 40 400 400 400 400 400 400 400 400 400 400 400
and 00 0
mainte
nance
Miscell 7,2 60 600 600 600 600 600 600 600 600 600 600 600
aneous 00 0
Wages 28, 16 1628 1706 2048 2300 3019 4100 4158 2483 1943 1890 1706
and 59 17
salaries 8
Total 51 7128 8106 5548 5800 1151 7600 7658 9083 5443 5390 8206
expens 17 9
es
Operati 5,4 24 (204 (283 878 1315 (175 6306 6387 (136 731 574 2767
on 45 6) 5) 4) 8)
profit
or loss

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

PART B

Betsy has come back to you with some changes to be made to the draft budget. These
changes will have come via email or feedback on your hard copy draft.

Betsy also thinks that you have over calculated the cost of stock and the wages at 25% is
too high. She has asked you to consider options for reducing the cost of both without
affecting customer service levels, the quality of the product, and of course the income.

She has also asked you to have the final draft of the budget back to her within the week.

1. Provide at least three recommendations for changes to the budget that will satisfy
Betsy’s requests in a memo. It is your responsibility to meet the budget so you can choose to
make recommendations to increase income, decrease expenditure wherever you see fit, or
even negotiate not to make any changes to the expenditure.

Make the changes to your budget in the accounting software. Produce a final budget report
and submit it to your assessor along with a memo outlining the changes you have (or have
not) made with an explanation justifying your decisions. In your justifications include the
advantages and disadvantages of accepting your changes. Submit your memo and report to
your assessor by the due date.

ANS: Suggest a new menu

Increase the cost of accommodation

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Building and give a better deal

Bundling the accommodation

Package with meals

PART C

Betsy has approved your budget and you need to sit down with the short order cook to
discuss the budget as they do all of the ordering and are responsible for meeting the food
and beverage budget requirements. Assume that one of your recommendations to Betsy
was to drop the cost of food purchases without dropping the quality. The short order cook
is not happy with this decision and you need to collaborate with them to come up with the
alternative options.

The B&B is known for its exquisite breakfasts and currently, all food is sourced locally
from individual suppliers, and where possible, organic produce. Everything is made from
scratch and most items on the menu are made with fresh ingredients. The menu is as
follows:

 Homemade Bircher muesli with seasonal fruit compote and activated nuts.

 Baked French toast with fresh seasonal fruit and blackberry compote.

 Buttermilk pancakes with orange cardamom syrup.

 Three egg omelettes with your choice of fillings – chorizo, bacon, mushrooms,
spinach, feta, goat cheese, brie, blue cheese, vintage cheddar, and tomatoes.

 Pumpkin and spinach quiche with rocket breakfast salad.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

 Eggs benedict with your choice of ham, smoked salmon, mushrooms, or bacon.

 Corn and zucchini fritters with a delectable potato rosti and breakfast salad and
salsa.

 The world’s best chicken and champagne breakfast.

 The big breakfast with steak, pork, and fennel sausages, bacon, tomatoes,
mushrooms, spinach, potato rosti, and toast.

 Avocado smash with feta and oven roasted capsicum on your choice of four
different breeds.

 Good ole’ bacon and eggs on your choice of bread.

You believe that there are several ways to reduce the costs.

1. Work with one other student in the roles of manager and short order cook to discuss
the final budget, explain what their role is in terms of financial management (to stay within
the budget, save money where possible) and together come up with a list of at least four
recommendations to reduce the costs.

ANS: Frozen berries, Sparkling wine

Breads used for other purpose also.

Frozen black berries

Goat cheese

Decrease the number of eggs

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

2. Write a memo to your assessor with your recommendations for reducing the cost of the
menu. You will need to make sure that your recommendations do not have an impact on the
level of customer service and the B&BS reputation for exquisite breakfasts.

ANS: To assessor

Some of berries replaced by Frozen berries

Frozen black berries

Expensive cheese to replace with Goat cheese

Decrease the number of eggs

Sparkling wine

Breads used for other purpose

These are the eliminating in efficiency, identify manual paper-based systems that could be
computerized. Avoid over specifying such as high-quality components for low quality
product.

Carefully checking supplier invoices for over charging, common examples are double billing
incorrect charges

Thank you

PART D

It is September and the budget is as follows:

July July August August

Budget Actuals Budget Actuals

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

INCOME

Accommodation 3150 5020 2940 3670

Food 1680 1820 1890 2040

Beverages 1638 1680 1680 1896

TOTAL
6468 8520 6510 7606
REVENUE

EXPENSES

Overhead

Stock 1,327 2,100 1,428 2,300

Lease 1,500 1,500 1,500 1,500

Repairs/
400 600 400 300
maintenance

Advertising 200 200 200 200

Laundry 800 1,000 800 950

Wages 1,617 1,532 1,628 1,450

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Miscellaneous 600 560 600 400

TOTAL EXPEND. 6,444 7,492 6,556 7,100

+/- 24 1,028 -46 506

Cash on hand: start 10,000 10,000 10,024 11,028

Cash on hand: end 10,024 11,028 9,978 11,534

You as the manager and the small order cook have agreed to speak to your fruit and
vegetable supplier to see if there are any possibilities of reducing the cost of your
purchases. You want to reduce your delivery from 4 days per week to twice a week and
rather than telling them what fruit and vegetables you want, you are requesting them to
select the best quality for the cheapest price, i.e., the cheapest on the day.

Also, as part of cost savings, you have had to make the decision to move away from local
suppliers of shelf items such as porridge, flour, herbs and spices, sugar, etc. Now that
Costco has opened you have the option of buying in bulk. You have calculated that this will
save you approximately $3,000 - $4,000 per year.

1. Enter the above budget income and expenditure amounts for July and August to
produce a suitable report.

ANS:

Communication Report:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

INCOME July August

Accommodation 5020 3670
Food 1820 2040
Beverages 1680 1896
TOTAL REVENUE 8520 7606

EXPENSES
Overhead
Stock 2100 2300
Lease 1500 1500
Repairs/maintenance 600 300
Advertising 200 200
Laundry 1000 950
Wages 1532 1450
Miscellaneous 560 400
TOTAL EXPEND. 7492 7100

As the manager, you have been trying to cut costs in wages by doing the housekeeping
yourself during the week and on Saturdays. While you have made savings, you have run
yourself into the ground and are exhausted. It has also meant that customer service has
suffered because you are running from the office to the cabins during the two-to-three-hour
cleaning window while customers wait. Sales have been up with accommodation running at
92% occupancy over the past four months. You want to bring the casual housekeeper back in
for 7 days per week. This will add approx. $4000 to your monthly expenditure.

1. Draft a communication to Betsy regarding your evaluation of the budget – how you
are feeling, how in your effort to reduce expenditure, this has caused a slump in customer
service, your recommendations for changes to the budget, and the impact that the changes
will have – positive and negative. You will need to influence Betsy so ensure you
demonstrate that your month-to-date actuals are ahead of budget and how you are saving
money. Include your report in your communication to Betsy.

ANS:

Memo to Betsy: evaluation of the budget

ANS:

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Memo to Betsy:

To Betsy

CEO

I have seen many changes in budget and due to rigorous efforts and lot of meetings conducted
with suppliers to decrease the cost. I am totally satisfied with that to bring profit and some I
must recommend to decrease the cost would be

Optimize labor scheduling and staff training.

Attend to utilities.

Stay on top of maintenance.

Improve the employee onboarding experience.

Take advantage of technology to automate processes.

Streamline F&B to reduce waste

PART E

It’s the beginning of November and the following income and expenses are for October.

Invoices received:

Patches Fruit and Veg $522

Dan Murphy’s $160

Laman’s Meats $340

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Olsen Laundry $400

Receipts:

Costco $178

Credit Card Payments (guests):

C. James $590

- Accom 300

- Food 230

- Bev 60

F. Dunkertin $1140

- Accom 600

- Food 420

- Bev 120

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

M. Tan $792

- Accom 450

- Food 286

- Bev 56

J. Kelly $1074

- Accom 300

- Food 410

- Bev 364

L. Keen $760

- Accom 450

- Food 310

- Bev 0

B. Smith $214

- Food 214

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

The last two months have seen some changes. There was a major hail storm in the area
which caused damage to one of the cabins. The storm caused a lot of damage and the
cabin has been uninhabitable for 5 weeks across September and October. The occupancy
rate has dropped to 69%. The insurance company is paying for the majority of the damage
but $5,000 will need to be paid out of pocket.

Septembe Septembe
October Octobe
r r r
Budget Actuals
Budget Actuals

INCOME

Accommodation 2,940 2,028 3,780 2100

Food 1,890 1,228 2,520 1800

Beverages 1,995 1,296 1,890 600

TOTAL REVENUE 6,825 4,552 8,190 4570

EXPENSES

Overhead 0 0 0 0

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Stock 1,554 1,180 1,764 1200

Lease 1,500 1,500 1,500 1,500

Insurance 700 700 0 0

Repairs/maintenance 400 380 400 400

Advertising 200 200 200 200

Electricity 2,200 2,200 0 0

Laundry 800 500 800 700

Wages 1,706 3,300 2,048 2,800

Miscellaneous 600 290 600 700

TOTAL EXPEND. 9,660 10,250 7,312 11800

+/- -2,835 -5,698 878 -7230

Cash on hand: start 9,978 11,534 7,143 5836

Cash on hand: end 7,143 5,836 8,021 1394

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

1: Use the information above to update the budget in the blank cells

2: Create a report outlining the cash flow and submit it to your assessor with an explanation
of how you might recover from the deficit this month. Make at least two recommendations
for cash recovery in September/October.

ANS:

Cash Flow Report: There are only two ways to reduce a budget deficit. You must either
increase revenue or decrease spending. On a personal level, you can increase revenue by
getting a raise, finding a better job, or working two jobs. You can also start a business on the
side, draw down investment income, or rent out real estate.

PART F

It is the end of December and the actual cash amount is down 53% on the original
projection. A large contributing factor is that income targets have not been met and the
food and beverage budgets have been over spent by 20%. Betsy has asked you to come up
with recommendations to solve the income problem, forecast for the remaining six months
of the financial year, and communicate the new targets and the importance of meeting
budgets to the cook.

The good news is that you have heard through the grapevine that there are a number of
events happening thin the region in the last half of the year. These are weekday tourism
events and there are a number of big construction projects where employee’s drive-in and
drive-out for shifts Monday to Friday.

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

1. What sources of information might you need to set realistic projections for the rest of the
year, including finding out more information about what is coming up in the region? Make a
list of at least four people or places you could seek information from.

ANS: Local council

Approach construction companies

tourism association

Local industry network

2. Identify at least three solutions for the income slump. The solutions should concentrate on
increasing income and revenue rather than on reducing expenses.

ANS: Design new packages target long-term stay, or repeat visit offer, loyalty programs
offering point on accommodation, offer food beverage vouchers, or offer, additional facilities
like transportation to the event’s new advertisement campaign, market research, offering food
and beverage to walk in customers. Lunch and dinner packages for the in accommodation
customers, speak to local suppliers and ask for better rates on fresh produce, to help you keep
giving them business.

3.Write a memo or email to Betsy and the Cook at the B&B outlining the answers to the
above questions and including a discussion aimed at the cook about the importance of
meeting budget restrictions, what the cook should do if they are having trouble meeting the
budget or find it challenging keeping relationships with suppliers. Submit your memo to your
assessor in the role of Betsy.

ANS:

Memo to Betsy: outlining the solution for income slump and budget meeting
requirement

To assessor

These are the recommendations

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 SIT40516 - Certificate IV in Commercial Cookery
Full Name: RAKESH
Student ID: 200137

Chef: Order the frozen products where ever possible.

Order Pre-made products to reduce the wages cost as it will help you roster less staff.

Bulk ordering for dry goods and frozen products.

Follow bulk production to utilise the extra produce ordered before it spoils or expires to
increase the shelf life.

freeze the bulk cooked food to extend the usage. Use convenience products.

Thank you

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