Manage budgets and financial plans
Assessment Task 1
Manage budgets and financial plans
Big Red Bicycle Pty Ltd
Task A
Based on the master budget, there have something wrong and unclear. All the numbers are the same, evenly quarter two have more sale than other quarter, at least less 30% than quarter two. We can easy to recognize with a few changes and we can achieve a goal $1.000.000
Option 1: Sales on Q1, Q3 and Q4 less 30% than Q2. That’s mean the volume of Q2 going to increase 30% than other and the commission will increase 30% as well
Option 2: Decrease Cost of Goods Sold and Expense by 20% due to the current economic climate.
By that way we can get more revenue by produce more volume for sale and also we can deal with supplier to get a special price, that cheaper than before. If they not agree with that, we can use another resource to replace that. Also we can use a promotion or gift that make customer happy to pay for our product and they will be back next time.
Reduce employment expenses 20%= reduce staff, the net profit will be $1,051,500
Option 3: Decrease Expense and Commissions
The commission negotiated with members of the sales team is now at 2.5%, therefore the company will pay more for the commission and gross profit every quarter had changed too. Those things made the Net Profit before Tax reduce a bit. It’s going down from $938,500 to $923,500.
We have to have a plan to control the expense, reduce the cost of product, try to used-up the old material and do not advertise a new product without a plan. Set a new goal to achieve, per half its can motivate employees working harder and per half can save a money for commission.
From option 1 to option 3, we can easy to recognize that reduce the cost of goods sold, expense and increases sale volume are the best way to achieve a goal. We do not need to reduce the workforce or increase the price of sale, that way will put our business in risky
Task B
Manage budgets and financial plans
Big Red Bicycle Pty Ltd
Task A
Based on the master budget, there have something wrong and unclear. All the numbers are the same, evenly quarter two have more sale than other quarter, at least less 30% than quarter two. We can easy to recognize with a few changes and we can achieve a goal $1.000.000
Option 1: Sales on Q1, Q3 and Q4 less 30% than Q2. That’s mean the volume of Q2 going to increase 30% than other and the commission will increase 30% as well
Option 2: Decrease Cost of Goods Sold and Expense by 20% due to the current economic climate.
By that way we can get more revenue by produce more volume for sale and also we can deal with supplier to get a special price, that cheaper than before. If they not agree with that, we can use another resource to replace that. Also we can use a promotion or gift that make customer happy to pay for our product and they will be back next time.
Reduce employment expenses 20%= reduce staff, the net profit will be $1,051,500
Option 3: Decrease Expense and Commissions
The commission negotiated with members of the sales team is now at 2.5%, therefore the company will pay more for the commission and gross profit every quarter had changed too. Those things made the Net Profit before Tax reduce a bit. It’s going down from $938,500 to $923,500.
We have to have a plan to control the expense, reduce the cost of product, try to used-up the old material and do not advertise a new product without a plan. Set a new goal to achieve, per half its can motivate employees working harder and per half can save a money for commission.
From option 1 to option 3, we can easy to recognize that reduce the cost of goods sold, expense and increases sale volume are the best way to achieve a goal. We do not need to reduce the workforce or increase the price of sale, that way will put our business in risky
Task B