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BSBFIM601 MANAGE FINANCES
BUDGETS Task 2 You’ve become aware of a new competitor opening in your local area. You consider decreasing rates by 10%. However, wages are currently under review and are likely to rise by 2.5% for all staff. If this occurs, you think you will have to increase the standard room rate to $125 if the business is to remain profitable. To determine the impact of these changes on your business, you need to compare the two scenarios. Base your calculations on the following business information.
Maximum capacity: Number of days per year: Expected occupancy rate: Current tariff per room per night: Servicing costs per room/night:
30 rooms 365 75% $120 $20 labour $5 supplies (bathroom, etc.)
Anticipated wage rise of 2.5% Fixed costs:
Admin/reception salaries: Grounds & maintenance salaries: General manager salary: Utilities (electricity, gas, rates) Depreciation of PPE Advertising
3 people @ $60,000 salary per annum 2 people @ $50,000 per annum 1 person @ $85,000 per annum $90,000 per annum $140,000 per annum $60,000
When completing your calculations, don’t forget to include labour on-costs.
Superannuation contribution: 9.5% Payroll tax: 2% Safe Work premiums: 1% Option 1 – increase room rate + wage rise Rate / formula
Budgeted nights booked Tariff revenues
125*365*75%*30=985,500*10%-
Option 2 – Total $ reduce room rate by 10% + wage rise 8,213 8,213
1,026,563
886,950
Less variable costs Room servicing labour Room servicing supplies Total variable costs Contribution margin
© Didasko Digital 2018
22.5*365*75%*30
184,781
193,815
5*365*75%*30
41,063
41,063
225,844 1,026,563-225844=800,719 886,950-234,878=652,072 www.didasko.com
800,719
234,878 652,072 1
BSBFIM601 MANAGE FINANCES
Option 1 – increase room rate + wage rise Rate / formula
Option 2 – Total $ reduce room rate by 10% + wage rise
Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities
60,000*3+12.5%=202,500
207,563
207,563
50,00x2+12.5%=112,500
112,500
112,500
85,000+12.5%
95,625
95,625
90,000
90,000
140,000
140,000
60,000
60,000
705.688
705,688
Wage rise 202,500*2.5%+202,500
Depreciation Advertising Total fixed costs Net profit before tax
705,688-800,719
95,031
-53,616
Less estimated tax expense (30%) Net profit after tax
95,031*30%
28,509
-16,085
95,031-28,509
66,522
-37,616
2
2018 Edition
BSBFIM601 MANAGE FINANCES
Task 3 You soon realise that occupancy rates are highly seasonal, with demand peaking during school holidays and long weekends. The annual occupancy rate recorded in your reports is actually just the average of the four quarterly occupancy rates. An investigation of past records reveals the following pattern. Max capacity per annum (nights booked) Nights booked at 75% occupancy rate overall Max capacity per quarter Occ. % Spring (Sept to Nov) 80 Summer (Dec to Feb) 100 Autumn (March to May) 75 Winter (June to August) 45
10,950 8,213 2,738 No. nights 2,190 2,738 2,053 1,232 8,213
Spring quarter $ Budgeted nights booked Tariff revenues
Summer quarter $
Autumn quarter $
Winter quarter $
Annual total $
2,190 262,800
2,738 328,560
2,053 246,360
1,232 147840
8,213 985,560
Room servicing labour
49,275
61,605
46,193
27,720
184,793
Room servicing supplies
10,950
13,690
10,265
6,160
41,065
60,225
75,295
56,458
33,880
225,858
202,575
253,265
189,902
113,960
759,702
50,625
50,625
50,625
50,625
202,500
25,000
25,000
25,000
25,000
100,000
21,250
21,250
21,250
21,250
85,000
Utilities
22,500
22,500
22,500
22,500
90,000
Depreciation
35,000
35,000
35,000
35,000
140,000
Advertising
15,000
15,000
15,000
15,000
60,000
169,375
169,375
169,375
169,375
677,500
33,200
83,870
20,527
55,415
82,202
Less variable costs
Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary
Total fixed costs Net profit / (loss) before tax
Note: The annual totals for each entry should reflect the results for Option 1 in Task 2. Totals may vary by one or two dollars due to rounding processes when calculating quarterly figures.
© Didasko Digital 2018
www.didasko.com
3
BSBFIM601 MANAGE FINANCES
Task 4 It’s essential to prepare a cash budget to maintain a business’s solvency (or cash position). Although this could be done on a monthly basis, use the winter quarter figures to complete this activity. Base your calculations on the following assumptions. All customers are charged 10% GST. 85% of customers pay their bills (including GST) within the same quarter of their stay at your establishment. The other 15% of customers pay in the following quarter. All expenses (other than depreciation) are paid in the quarter in which they are incurred. Figures provided for autumn quarter cash flows (inflow and outflows) are GST inclusive. All winter cash flow (inflow and outflows) figures in the above budget are GST free. GST must be calculated and added to all GST-attracting cash flow figures in the cash flow statement. Ignore PAYG deductions for this activity. The cash balance at the beginning of the winter quarter is $5,000. Round your figures up to the nearest whole dollar.
Winter quarter $ Budgeted nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation of PPE Advertising Total fixed costs Net profit / (loss) before tax
1,232 147840 27,720 $6,160 33,880 113,960 50,625 25,000 21,250 22,500 35,000 15,000 169,375 -55,415
Autumn quarter $ Receipts from previous quarter’s customers Receipts from current quarter’s customers Total estimated cash inflows
Winter quarter $
246,360
36,954 147,840
147,840 184,794
Estimated cash outflows Room servicing labour 4
Est cash receipts winter quarter
27,720
2018 Edition
BSBFIM601 MANAGE FINANCES
Room servicing supplies Admin/reception salaries
50,625
Grounds & maintenance salaries General manager salary
25,000 21,250
Utilities
22,500
Advertising
35,000
Payment of net GST from autumn quarter * (see below) Total estimated cash outflows
15,000 197,095
Net surplus / deficit
-12,301
Cash balance at start of winter quarter
5000
Cash balance at end of winter quarter
-7,301
GST Liability for autumn quarter GST collected and payable $256,625 × 10% =
$ 25,663
Less GST paid: Supplies $10,265 × 10% =
1,027
Utilities $22,500 × 10% =
2,250
Advertising $15,000 × 10% = Net GST for autumn – payable early in winter quarter
1,500
© Didasko Digital 2018
www.didasko.com
$
4,777 20,886
5
BUDGETS Task 2 You’ve become aware of a new competitor opening in your local area. You consider decreasing rates by 10%. However, wages are currently under review and are likely to rise by 2.5% for all staff. If this occurs, you think you will have to increase the standard room rate to $125 if the business is to remain profitable. To determine the impact of these changes on your business, you need to compare the two scenarios. Base your calculations on the following business information.
Maximum capacity: Number of days per year: Expected occupancy rate: Current tariff per room per night: Servicing costs per room/night:
30 rooms 365 75% $120 $20 labour $5 supplies (bathroom, etc.)
Anticipated wage rise of 2.5% Fixed costs:
Admin/reception salaries: Grounds & maintenance salaries: General manager salary: Utilities (electricity, gas, rates) Depreciation of PPE Advertising
3 people @ $60,000 salary per annum 2 people @ $50,000 per annum 1 person @ $85,000 per annum $90,000 per annum $140,000 per annum $60,000
When completing your calculations, don’t forget to include labour on-costs.
Superannuation contribution: 9.5% Payroll tax: 2% Safe Work premiums: 1% Option 1 – increase room rate + wage rise Rate / formula
Budgeted nights booked Tariff revenues
125*365*75%*30=985,500*10%-
Option 2 – Total $ reduce room rate by 10% + wage rise 8,213 8,213
1,026,563
886,950
Less variable costs Room servicing labour Room servicing supplies Total variable costs Contribution margin
© Didasko Digital 2018
22.5*365*75%*30
184,781
193,815
5*365*75%*30
41,063
41,063
225,844 1,026,563-225844=800,719 886,950-234,878=652,072 www.didasko.com
800,719
234,878 652,072 1
BSBFIM601 MANAGE FINANCES
Option 1 – increase room rate + wage rise Rate / formula
Option 2 – Total $ reduce room rate by 10% + wage rise
Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities
60,000*3+12.5%=202,500
207,563
207,563
50,00x2+12.5%=112,500
112,500
112,500
85,000+12.5%
95,625
95,625
90,000
90,000
140,000
140,000
60,000
60,000
705.688
705,688
Wage rise 202,500*2.5%+202,500
Depreciation Advertising Total fixed costs Net profit before tax
705,688-800,719
95,031
-53,616
Less estimated tax expense (30%) Net profit after tax
95,031*30%
28,509
-16,085
95,031-28,509
66,522
-37,616
2
2018 Edition
BSBFIM601 MANAGE FINANCES
Task 3 You soon realise that occupancy rates are highly seasonal, with demand peaking during school holidays and long weekends. The annual occupancy rate recorded in your reports is actually just the average of the four quarterly occupancy rates. An investigation of past records reveals the following pattern. Max capacity per annum (nights booked) Nights booked at 75% occupancy rate overall Max capacity per quarter Occ. % Spring (Sept to Nov) 80 Summer (Dec to Feb) 100 Autumn (March to May) 75 Winter (June to August) 45
10,950 8,213 2,738 No. nights 2,190 2,738 2,053 1,232 8,213
Spring quarter $ Budgeted nights booked Tariff revenues
Summer quarter $
Autumn quarter $
Winter quarter $
Annual total $
2,190 262,800
2,738 328,560
2,053 246,360
1,232 147840
8,213 985,560
Room servicing labour
49,275
61,605
46,193
27,720
184,793
Room servicing supplies
10,950
13,690
10,265
6,160
41,065
60,225
75,295
56,458
33,880
225,858
202,575
253,265
189,902
113,960
759,702
50,625
50,625
50,625
50,625
202,500
25,000
25,000
25,000
25,000
100,000
21,250
21,250
21,250
21,250
85,000
Utilities
22,500
22,500
22,500
22,500
90,000
Depreciation
35,000
35,000
35,000
35,000
140,000
Advertising
15,000
15,000
15,000
15,000
60,000
169,375
169,375
169,375
169,375
677,500
33,200
83,870
20,527
55,415
82,202
Less variable costs
Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary
Total fixed costs Net profit / (loss) before tax
Note: The annual totals for each entry should reflect the results for Option 1 in Task 2. Totals may vary by one or two dollars due to rounding processes when calculating quarterly figures.
© Didasko Digital 2018
www.didasko.com
3
BSBFIM601 MANAGE FINANCES
Task 4 It’s essential to prepare a cash budget to maintain a business’s solvency (or cash position). Although this could be done on a monthly basis, use the winter quarter figures to complete this activity. Base your calculations on the following assumptions. All customers are charged 10% GST. 85% of customers pay their bills (including GST) within the same quarter of their stay at your establishment. The other 15% of customers pay in the following quarter. All expenses (other than depreciation) are paid in the quarter in which they are incurred. Figures provided for autumn quarter cash flows (inflow and outflows) are GST inclusive. All winter cash flow (inflow and outflows) figures in the above budget are GST free. GST must be calculated and added to all GST-attracting cash flow figures in the cash flow statement. Ignore PAYG deductions for this activity. The cash balance at the beginning of the winter quarter is $5,000. Round your figures up to the nearest whole dollar.
Winter quarter $ Budgeted nights booked Tariff revenues Less variable costs Room servicing labour Room servicing supplies Total variable costs Gross profit Less fixed costs Admin/reception salaries Grounds & maintenance salaries General manager salary Utilities Depreciation of PPE Advertising Total fixed costs Net profit / (loss) before tax
1,232 147840 27,720 $6,160 33,880 113,960 50,625 25,000 21,250 22,500 35,000 15,000 169,375 -55,415
Autumn quarter $ Receipts from previous quarter’s customers Receipts from current quarter’s customers Total estimated cash inflows
Winter quarter $
246,360
36,954 147,840
147,840 184,794
Estimated cash outflows Room servicing labour 4
Est cash receipts winter quarter
27,720
2018 Edition
BSBFIM601 MANAGE FINANCES
Room servicing supplies Admin/reception salaries
50,625
Grounds & maintenance salaries General manager salary
25,000 21,250
Utilities
22,500
Advertising
35,000
Payment of net GST from autumn quarter * (see below) Total estimated cash outflows
15,000 197,095
Net surplus / deficit
-12,301
Cash balance at start of winter quarter
5000
Cash balance at end of winter quarter
-7,301
GST Liability for autumn quarter GST collected and payable $256,625 × 10% =
$ 25,663
Less GST paid: Supplies $10,265 × 10% =
1,027
Utilities $22,500 × 10% =
2,250
Advertising $15,000 × 10% = Net GST for autumn – payable early in winter quarter
1,500
© Didasko Digital 2018
www.didasko.com
$
4,777 20,886
5
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