TASK 3 – Case Studies: Prepare financial statementsand reports for Simpsons Pty LtdPurpose You will demonstrate your skills and knowledge by completing scenariobasedcase studies.Case Studycontext andScenarioSimpsons Pty LtdSimpsons Pty Ltd is a small take away restaurant located in the SydneyCBD. The restaurant is owned by Mr & Mrs John Spice. The restaurantstarted its activities in January 2015. In December 2015, the followinginformation was collected:Sales and COGS activities for 2015The restaurant sold 54,600 take away meals, and the price per meal was$10.50. The food cost per meal sold was $4.60. Also 20,000 units of softdrinks were sold during the year. Soft drinks are sold for $2.50 and thecost price was $0.80.Budget forecasting for 2016The owners estimated that for the next year the price per take awaymeal could be increased to $13.00. They have also predicted that sales(in units) would increase by 10% in 2016. The owners have entered intoa monthly contract with the soft drinks supplier. According to thecontract the restaurant must purchase a minimum of 2,000 units of softdrinks per month and the cost price will be reduced to $0.50 per unit.The restaurant owners decided to reduce the selling price of soft drinksto $1.50 in order to increase sales (in units) by 50% and are expecting tomeet the required selling demand. The owners have anticipated thefollowing expenses for 2016:Anticipated yearly expenses for 2016COGS (Food + Beverage)$295,267 =Food ($283,267.00) / Beverage($12,000.00)Rent $ 40,000 Utilities $10,000Wages $130,000 Miscellaneous $ 6,000Instructions You will be completing two (2) tasks for this case study assessment.Task 1: Complete all three (3) activities in the section that follows.To complete the activities, you will be preparing spreadsheets tomonitor and review the ‘Budgets’ and ‘Profit & Loss statements’ usingMicrosoft Excel.You are encouraged to display your answers by clearly calculating asimple formula in each cell. You will upload your spreadsheet workbookon Moodle as part of your evidence.Your assessor will give you clear instructions on how to do this.ILSC Business College: BSBFIM501 Assessment Version 4.0518Page 16 of 19Task 2: To complete task 2, you will be writing a ‘Financial Report’ toidentify options for improved ‘budget performance’ and ‘contingencyplanning’ using word processing software. Refer to the task in thesection that follows.You will write your report using appropriate headings with your nameand ID in the header section of your document and upload your reporton Moodle with your assessment.AssessmentconditionsAssessment will be conducted in a simulated environment whereevidence gathered demonstrates consistent performance of typicalactivities to undertake financial management within a work team andinclude access to:§ Office equipment and resources§ relevant legislation, regulations, standards and codes§ interaction with others.ReasonableadjustmentIf you are unable to undertake the project assessment as designed,please speak to your assessor.ILSC Business College: BSBFIM501 Assessment Version 4.0518Page 17 of 19Case Studies – Tasks and InstructionsTASK 1: Preparing spreadsheets to monitor and review Budgets andProfit & Loss StatementsPLEASE NOTE: spreadsheets must be prepared using Microsoft ExcelActivity 1— Based on the above Sales and COGS activities for 2015:Prepare a spreadsheet that shows in 12 monthly columns the average monthly sales for foodand drinks and the average monthly COGS for meals and drinks.In addition, include end columns for the annual totals and another with the average quarterlytotals.Using the prepared template from Activity 1; continue with the following:Activity 2— Based on the above Budget forecasting for 2016:Prepare a 2nd spreadsheet similar to above (i.e. 12 monthly columns) for the yearly Profitand Loss Budget. Don’t forget to also include end columns for the annual totals and theaverage quarterly totals.Activity 3— Based on the following assumptions prepare a 3rd spreadsheet with the actualaverage monthly trading activities for the 1st quarter 2016.Assume that during the 1st quarter of 2016:§ Food revenue was 20% higher than the budget forecasted§ Food Cost was 30% higher than the budget forecasted§ Beverage sales was 15,000 units§ Utilities Expense was $8,000§ Wages expense $25,000§ Rent expense was $10,000You are also required to monitor the trading activities for Simpsons Pty Ltd for the first quarterof 2016, and identify and record in an additional column all dollar (AUD$) variances and as apercentage % figure from the forecasted budget.ILSC Business College: BSBFIM501 Assessment Version 4.0518Page 18 of 19TASK 2: Develop a Financial ReportPLEASE NOTE: Up load your report on Moodle with this assessmentActivity 1Write a Financial Report (in the appropriate format) to the restaurant owners; include thefollowing:In Activity 3 you have identified variance between the budget and actual results for the firstquarter of 2016. Explain different contingency planning strategies and adjustments that you canmake to your budgets for the rest of 2016. Be sure to address any possible causes for the variance.Ensure you include each of the following main areas in your report:§ Meals§ Drinks§ COGS§ Rent§ Utilities§ Wages§ MiscellaneousActivity 2You must include your recommendations and a conclusion in this section of the report you needto discuss:§ How you will implement and monitor your changes to the business to control costs§ How you plan on making new contingency plans for further budget variances§ How you can collect and use information from work teams to use with your budgets§ Comment on how effective the financial information is that you collected.§ Explain how you will negotiate and communicate budget information with teammembers.§ Explain how you can support staff to make budget changesILSC Business College: BSBFIM501 Assessment Version 4.0518Page 19 of 19Report Writing GuidelinesAssessment Task 2:The report should have an introduction like the below example:Please find below the performance report of your business for the year 2016. This report ismainly for the purpose of providing a financial analysis of your business’ progress during thefirst quarter of 2016 and towards the end of the year. Additionally, this report will providebudget projections and propose viable solutions for the rest of the year based on the outcomeof expenses in 2016.Moving forward, you will be receiving quarterly reports of this kind which will identify the costsof operating your company, your budget and variations between your actual performance andbudgeted performance. The highlighted variances will make it easier for you to quickly identifyaspects of your operations that require immediate attention, as indicated in therecommendations below.You must note from the report that your budget from actual income is significantly higher dueto increased costs in meals and drinks. Remedial actions are stipulated in the recommendationssection of this report so you can find ways to meet targets by end of the year.Main Points of Interest that you should include within the report:§ Financial analysis of income§ Meals§ Drinks§ Financial analysis of expenses§ COGS§ Rent§ Utilities§ Wages§ MiscellaneousRecommendations for Report Assessment 2 Task 2:This section refers to the possible contingency plans required based on the variances betweenbudget and actual results for the first quarter of 2016.
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