BSBFIM601 Manage Finances
Assessment Task 2 – Monitor and review budget
Manage Finance Report
Introduction
At the start of every quarter, Houzit Pty Ltd. Have plan and set goals of company to management
and monitor the performance from all the different activities. At the end of each quarter the company
will analyse the result by comparing the plan budget and the actual results.
In this report, I have monitored and review the current company information and compare it
with the plan budget. After evaluating the information, I developed the report to significant risk and
issues, the budget variances, performance of the company. Also, the recommendation for ongoing
finance management processes.
A. Risk / Issues:
According to budget variance report after the end of the first quarter one,
- The expects sales for quarter one is $3,394,248 but the actual sales are $3,371,200 which is
$23,048 different.
- Gross profit budget is $1,459,527 but gross profit different $43,623; the actual gross profit is
1,415,904 drops by 3%.
- Interest expense has increase $7,023 from the budget $21,127, the actual interest expense is
$28,150
- Cleaning cost increase $69 from the budget $3,256, the actual cleaning cost is $3,325
- The budget for repairs and maintenance is $16,068 but the actual repairs and maintenance cost
is $16150 which is increase $82.
- The budget for Telephone is $$2,999 has increase $101, The actual telephone cost is $3,100.
B. Variances:
Budget Sales is $3,394,248 and the actual sales $3,371,200 the sales were decrease $23,048. The
reason behind the sales drop is price change can reduce sales, promotion is not aligned, poor
communication between customer and retail teams or between team in the company.
An interest expense has increase $7,023 from the budget $21,127, the actual expense was $28,150.
The reason behind an increase of the interest expense is Bank has increased the interest rate.
Cleaning cost also increase from the budget $3,256 to $3,325. The reason is the cleaning company
had raised prices on their service
Repairs and maintenance budget is increase from $16,068 to $16,150. The reason is other than
scheduling and planning maintenance, there was damage equipment that force to pay more for repairs.
Telephone cost budget increase from $$2,900 to $3,100. The reason is the telephone company has
increase the plan for usage or the data overage charge that cost more than the budget.
C. Performance:
From the last 5 years, the sales of the first quarter of year 2011/2012 is ahead of
expectation, but it lower than the budget plan by 1% low margin for the quarter. That is
unfavourable for the organisation. Recommend that the organisation should carefully considered in
future periods to ensure that they are more substantial and are building towards an annual report
previous year.
For the total expense of this quarter, by the reduce of an advertisement cost by 25%. The
electricity expense is drop by 2%. Wages and salaries also 1% drop down. The total expense was
going down that means favourable for the organisation.
For the net profit of the organisation in this quarter, the net profit is going up by 414%. The
net profit was increase from $727 to $3,733 the variance of the net profit is $3,006. That is
favourable for the organisation.
BSBFIM601 Manage Finances
Conclusion
According to variances report, in the first quarter sales and profit are drop. To improve the
performance of the organisation, the management of the organisation should adopt appropriate
strategies to enhance the corporate profitability. The pricing and the appropriate organisation policy in
the fields of discount, return and refund should be implemented to avail the accurate price discounts to
the various customers of the organisation. The advertisement expenditure further needs to be controlled
in a way that the benefit accruing exceeds the cost associated with it.
Recommendation
The following key areas can be considered for recommendations.
- Review the discount, return, and refund policy to monitor and protect the gross profit and total
gross sales margin.
- Reduce loans to reduce exposure to rising interest rates.
- Review salaries and wages to reduce costs and improve viability
- Budgets should be prepared for all costs.
- Monitoring and reporting performance could be done monthly
Reference lists
- The variance report by Celina Patel, The Houzit’s accountant
