SITXFIN004 PREPARE AND MONITOR BUDGETS -Case Study

ASSSESSMENT METHOD 2 – CASE STUDY

Instructions for students

1. This assessment requires students to analyse the case study scenario and calculate costs
and prepare budgets for an event.

2. This case study consists of two parts

a. Part 1- Prepare draft budgets, negotiate and adjust financial commitments

b. Part 2- Prepare a revenue budget and an income statement

3. In order to achieve satisfactory in this assessment, you must satisfactorily complete all the
tasks as per the demonstration skills listed in the marking guide.

4. Assessor will inform you the submission date for this assessment and the date and time to
conduct the negotiation meeting. It recommends allocating approximately 16 hours for this
assessment. This includes ½ hour for the negotiation meeting.

5. You could complete with assessment in classroom based, computer lab or self-paced.
However, you must complete the task 2.8 in Part 1 in a simulated environment organise by
the assessor.

6. Ask your assessor, if you do not understand a question. Your assessor cannot tell you the
answer he/she may be able to re-word the question for you

7. You must use only black or blue pens to complete any document.

8. You must use word processing and spreadsheet software to complete these tasks.
Recommended font styles are Arial or times new roman and font size should be between 10
& 12.

9. Trainer /assessor will provide you the relevant templates

10. Specific instructions are given under each task.

11. If you have any special needs, must inform to your assessor before commencing the
assessment.

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PART 1

Case study scenario

Scenario
You’ve been appointed the project manager for organising and running a charity ball. The ball
will be held in the local town hall, a beautiful historic building in the centre of the shopping and
business district. The not-for-profit (NFP) organisation running the ball want a black tie, gala
event with a three- or four-course meal, music, dancing and entertainment. They plan to hold a
charity auction throughout the evening to raise more money for their cause. The ball will be held
on the last Saturday in October and they hope to sell 500 tickets.

You are responsible for organising the provision of all food and beverages, a MC, entertainment
and music. The charity will source all items for the auction.

The charity organisation has two main goals: to hold a successful event and make a reasonable
profit from the ball and the auction. They hope to make this an annual event as money raised
can significantly boost their ability to provide aid to others.

As part of the planning process, you must prepare a number of budgets to help achieve these
goals. The first stage of your planning process is to calculate expenses to determine the final
selling price for the ball tickets. An initial estimated figure of $150 to $200 has been discussed.
You must confirm if this is an appropriate price and determine anticipated profits for the
organisation. You will report your initial budgets to an event sub-committee of representatives
from the NFP organisation.

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Task 1: Write the responses based on the case study

Instructions to complete the task

1. Read the scenario information provided.

2. Complete Tasks 1, 2 and 3 in this assessment
3. Write your responses to the following contents
4. You can use accounting software to complete budget preparation tasks.

Contents Your responses

1. List two of the charity
organisation’s goals and
objectives for this event
To hold a successful event and make a reasonable profit from
the ball and the auction. They hope to make this an annual
event as money raised can significantly boost their ability to
provide aid to others.

The first stage of your planning process is to calculate expenses

to determine the final selling price for the ball tickets.
2. What budgets do you need to Prepare budget tables for all food and beverages, MCs,
prepare to help you achieve these entertainment and music.
goals

1. Supplier availability and cost control

3. What are four external and 2. All activity schedules
internal factors that might affect 3. Planning for selling tickets
the event and therefore your 4. Staff assignments and plans
budgets

4: What type(s) of data or information will assist you in the preparation of your budgets?
Where could you find it?

Information/data required Sources

catering，refreshments Food Supplier
Venue layout Marking
Labour cost Human resources department
Performers Marking
Advertising Advertising Supplier
Cleaning Cleaning Supplier
Linen Linen Supplier

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5: The event committee want to be involved in the planning process. What techniques can
you use to enable them to contribute to budget planning processes, negotiate changes
and inform them of budget decisions?

1. Accept the feedback and opinions of both parties.

2. Choose a method that is suitable for both parties to communicate budget
information.
3. Increase the number of meetings and increase consensus.

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Task 2: Prepare budgets

1. Read the scenario and information provided.

2. Complete the below listed tasks.

After conducting extensive research, you’ve obtained quotes from suppliers for the following
items.

Expense item Quote ($) Comments

Venue hire 3,500.00 Main hall and stage
Postage/stationery 350.00
Telephone 350.00
Event uniforms (F&B only) 750.00 Printed event t-shirt for service staff
Floral arrangements 3,900.00 6 x large stands, 42 x table centres
Lighting and stage hire 6,900.00 Stage, spot, dance floor
Microphones, data projector, screens, sound
Audio visual equipment hire 4,500.00
systems for entertainment
Equipment hire 1,790.00 Food preparation and service equipment
MC 800.00 Six hours including auction
Consultant fees 3,500.00

Task 2.1: Calculate linen expenses

1. You must use the “Template_A” given by the assessors to complete this task.

2. Refer to the Task 2.1 in Template_A and Calculate linen expenses.

3. One of the expenses incurred will be for the hire of linen for the event. Using the information
provided, calculate the linen hire costs.

Task 2.1: Calculate linen expenses

Linen type Price per item $ Quantity Cost $

Round tablecloths 16.5 42 693
Trestle
16.5 10 165
tablecloths
Table overlays 11.5 42 483

Napkins 1.8 500 900

Chair covers 6 500 3000

Total linen hire costs 5241

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Task 2.2: Prepare an expense budget

1. Refer to the Task 2.1 in “Template_A” and Prepare an expense budget.

2. Based on the quotes provided by suppliers and your calculations, prepare an expense
budget for the event.

Task 2.2: Prepare an expense budget

Expense budget

Expense item $

Venue hire 3500

Postage/stationery 350

Telephone 350

Event uniforms (F&B only) 750

Floral arrangements 3900

Lighting hire 6900

Audiovisual equipment hire 4500

Equipment hire 1790

MC 800

Consultant fees 3500

Linen hire 5241

Total expenses 31581

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Task 2.3: Calculate F&B labour costs

1. Refer to the Task 2.3 in Template_A and Calculate F&B labour costs
2. Based on the below information, calculate the total food and beverage wage costs
incurred from the labour hire company for the event.

All cooks, kitchen assistants and food and beverage service staff will be hired through a
hospitality labour hire company for the duration of the event only. The costs quoted by the
company include all penalties, workers’ compensation, WorkCover and other on-costs.
However, there is an additional overtime penalty of $10 per hour for all hours worked after the
first eight hours of any given day.

You need staff over a two-day period:

 Friday – room setup and food preparation
 Saturday – setup and delivery of service on the day of the event.
Job role No. of staff Rostered hours per person Pay rate per hour
Friday Saturday Friday $ Saturday $
Cook A 2 8 8 30.00 35.00
Cook B 2 8 10 30.00 35.00
Kitchen assistant 2 6 8 20.00 25.00
Kitchen hand 2 8 20.00 25.00
F&B waiter A 7 8 8 25.00 30.00
F&B waiter B 16 8 25.00 30.00
Bar attendant 2 6 6 25.00 30.00
Bar attendant 1 9 25.00 30.00

Task 2.3: Calculate F&B labour costs

F&B labour costs
Job role Wages Wages per person No. staff Total wages
Friday Saturday Overtime
$ $
$ $ $
Cook A 240 280 520 2 1040

Cook B 240 350 20 610 2 1220

Kitchen
120 200 320 2 640
assistant
Kitchen hand 200 200 2 400

F&B waiter A 200 240 440 7 3080

F&B waiter B 240 240 16 3840

Bar attendant 150 180 330 2 660

Bar attendant 270 10 280 1 280

Total F&B wages 11160

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Task 2.4: Calculate total labour costs

1. Refer to the Task 2.4 in Template_A and calculate total labour costs.

2. Based on the information provided, calculate the total food and beverage wage costs
incurred from the labour hire company for the event.

In addition to labour hire costs, you employ two supervisors for the event. These are staff you
have recruited personally and you pay a flat rate for the two days of $40.00 per hour. You
anticipate they will both work 12 hours each day.

Security is also required on the night, with two crowd controller/security staff employed through
another staffing agency. You will need 24-hour security from 3 pm Friday due to some of the
charity auction items being stored at the venue overnight. Their hourly rate is $40.00 on Friday
and $50.00 on Saturday and Sunday. All rates are from midnight to midnight.

No. of
Job role Rostered hours per person Pay rate per hour
staff
Friday Sat/Sun
Friday Saturday
$ $
Security A 1 3 pm to 11 pm 3 pm to 11 pm 40.00 50.00
11 pm to 7 am 6 pm to 2 am
Security B 1 40.00 50.00
(Sat) (Sun)
Security C 1 7 am to 3 pm 40.00 50.00

Task 2.4: Calculate total labour costs

Job role Wages Total wages

Friday $ Saturday $ Overtime $

Supervisor A 480 480 80 1040

Supervisor B 480 480 80 1040

Security A 320 400 720

Security B 400 400 800

Security C 400 400

Total F&B
11160
wages
Total event wages 15160

Task 2.5: Calculate food costs

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 Refer to the Task 2.5 in Template_A and calculate food costs.

 Based on the information provided, calculate the total food costs and cost per head for
the event.

 Calculate food cost per head against anticipated sales of 500 tickets.

A four-course meal with wine, beer, soft drinks and juices is included in the ticket price.

Meals will be served on a 50/50 basis except for the tapas appetiser, which is a shared platter.
An additional 60 main meals are required to cover staff and entertainers’ meals. These meals
are complimentary and their cost must be included in ticket sales.

Standard recipes have been costed for each course and an individual cost per serve
determined.

Task 2.5: Calculate food costs

Menu item Cost per platter $ No. serves required Food cost $
Tapas platter 9.76 3 per table x 42 tables 1229.76

Warm tandoori beef salad 5.84 250 1460

Stuffed agnolotti parcels 3.96 250 990

Mediterranean chicken breast 8.23 280 2304.4

Mustard and macadamia rack of
9.21 280 2578.8
lamb
White and dark chocolate torte 3.25 250 812.5

Marinated strawberry roulade 2.95 250 737.5

Tea/coffee 0.3 500 150

Petits fours 0.4 500 200

Total food costs 10462.96

Food cost per head 20.93

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Task 2.6: Calculate beverage costs

1. Refer to the Task 2.6 in Template_A calculate beverage costs.

2. Based on the information provided, calculate the total beverage costs and cost per head
for the event.

3. Calculate beverage cost per head against anticipated sales of 500 tickets.

Beverages for the gala dinner include a variety of red and white wines to match each course,
bottled light and heavy beer, post-mix soft drinks and orange juice.

Task 2.6: Calculate beverage costs

Beverage cost
Beverage item Cost per item Forecasted requirements
$
Sparkling wine $12.62 per bottle 90 1138.5

Sauvignon blanc $14.67 per bottle 100 1467

Chardonnay $13.20 per bottle 120 1584

$19.59 per half
Botrytis riesling 80 1567.2
bottle
Merlot $9.83 per bottle 80 786.4

Shiraz $10.52 per bottle 80 841.6

Cabernet sauvignon $13.90 per bottle 110 1529

Light beer (750 ml) $4.59 per bottle 70 321.3

Heavy beer (750
$4.79 per bottle 40 191.6
ml)
Soft drink 0.16 per serve 400 64

Juice 0.22 per serve 200 44

Total beverage costs 9534.6

Beverage cost per head 19.07

Task 2.7: Prepare event budgets

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1. Refer to the Task 2.7 in Template_A Prepare event budgets.

2. Based on the information provided and the results of the previous tasks, prepare event
budgets for the event.

The event committee has asked you to prepare two alternative event budgets based on two
different ticket selling prices: $175.00 or $200.00. They want to determine the most feasible and
profitable alternative for their organisation.

Costs for additional expenses need to be included in the revenue statement budgets. They are
calculated as a fixed percentage of total revenue from ticket sales.

Additional expenses % of revenue

Advertising 1%
Printing 0.25%
Room decoration 3%
Entertainment 5%

Task 2.7: Prepare event budgets

Alternative 1 % of sales Alternative 2 % of sales
500 tix x $175 500 tix x $200
Sales $ % $ %
Revenue from ticket sales 87500 100000
Cost of goods sold
Food cost 10462.96 11.96 10462.96 10.46
Beverage cost 9531.9 10.89 9531.9 9.53
Total cost of goods 19994.86 22.85 19994.86 19.99
Gross profit 67505.14 80005.14
Expenses
Labour costs 14990 17.13 14990 14.99
Venue hire 3500 4 3500 3.5
Postage/stationery 350 0.4 350 0.35
Telephone 350 0.4 350 0.35
Event uniforms (F&B only) 750 0.86 750 0.75
Floral arrangements 3900 4.46 3900 3.9
Lighting hire 6900 7.89 6900 6.9

Audiovisual equipment hire 4500 5.14 4500 4.5

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Equipment hire 1790 2.05 1790 1.79

MC 800 0.91 800 0.8

Consultant fees 3500 4 3500 3.5

Linen hire 5241 5.99 5241 5.24

Advertising 875 1 1000 1

Printing 218.75 0.25 250 0.25

Room decor 2625 3 3000 3

Entertainment 4375 5 5000 5

Total expenses 54664.75 55821

Profit/loss 12840.39 24184.14

Task 2.8: Negotiate the budgets with the event sub-committee

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1. You are required to negotiate the budgets prepared in task 2.2 and 2.7 with event sub-
committee. The purpose of the negotiation is to reduce the expenses and maximise the
profits.

2. You will be conducting the negotiation meeting in a simulated environment, organised by

the assessor. There may be two to three members participating for the meeting.

3. You must brief the budgets to the committee and provide copies of the linen and event
budgets to each committee member.

4. A major liquor supplier has informed to the committee, that they are happy to supply wine for
the event. In return supplier expects to promote their products. (Example: Print the products
on the tickets)

5. The following topics to be negotiate during the meeting. You must document the agreed
outcome of the negotiation using the below template.

Topics to be Negotiate Agreed outcome of the negotiation meeting

Linen expenses

Expense budget

Offer from the liquor

supplier

Task 2.9: Adjust financial commitments

1. Refer to the Task 2.9 in Template_A Adjust financial commitments.

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2. Based on the information provided, recalculate linen and beverage expenses.

After meeting with the event committee and discussing potential methods of reducing expenses
and maximising profits, the following decisions have been made.

 Linen hire expenses are to be reduced because chair covers and overlays will not be used
for the event.
 The committee accepted an offer from a major liquor supplier to supply all wine for the event
in return for acknowledgement on printed materials, such as menus, posters and banners.

Task 2.9: Adjust financial commitments

Linen hire

Price per item Cost

Linen type Quantity
$ $
Round tablecloths 16.5 42 693

Trestle tablecloths 16.5 10 165

Napkins 1.8 500 900

Total linen hire costs 1758

Beverage costs

Beverage cost
Beverage item Cost per item Forecasted requirements
$
Light beer (750 ml) $4.59 per bottle 70 321.3
Heavy beer (750
$4.79 per bottle 40 191.6
ml)
Soft drink $0.16 per serve 400 64

Juice $0.22 per serve 200 44

Total beverage costs 620.9

Beverage cost per head 1.24

Task 2.10: Prepare adjusted event budget

1. Refer to the Task 2.10 in Template_A Prepare adjusted event budget.

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2. Based on the information provided and the results of the previous tasks, prepare an
adjusted event budget for the gala ball that reflects all new calculations and decisions made
by the event committee.

The event committee has made the following decisions.

 Ticket prices are set at $175.00 per person unless profits are below $25,000 in the final
budget.

 The advertising allowance is to be raised to 3% and printing to 0.5%.

 Entertainment expenses will remain the same at 5%. The band contracted to play during the
meal has offered its services for free as a donation to the charity.

 Room decoration expenses will be increased to $3,000.

 Lighting and audio-visual expenses are to be decreased by $1,000 each.

 The supplier who provided costs for the hire of catering equipment for the event is supplying
all equipment free of charge for the same acknowledgements as the liquor supplier.

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Task 2.10: Prepare adjusted event budget

Budget % of sales
500 tix x $175.00
Sales $ %
Revenue from ticket sales 87500
Cost of goods sold
Food costs 10462.96 11.96
Beverage costs 620.9 0.7
Total cost of goods 11083.96 12.67
Gross profit 76416.14
Expenses
Labour costs 14990 17.13

Venue hire 3500 4

Postage/stationery 350 0.4

Telephone 350 0.4

Event uniforms (F&B only) 750 0.86

Floral arrangements 3900 4.46

Lighting hire 5900 6.74

Audiovisual equipment
3500 4
hire
Equipment hire 0

MC 800 0.91

Consultant fees 3500 4

Linen hire 1758 2

Advertising 2625 3

Printing 437.5 0.5

Room decorations 3000 3

Entertainment 4375 5

Total expenses 49735.5 49735.5

Profit/loss 26680.64

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Task 3: Write the responses to the following contents
You must write the responses to the following, based on questions 1 to 4 on the results of Task
2.7: Prepare events budgets.
Contents
1. How can you present the draft revenue
budgets to the event committee and other
relevant parties
2. Why should you circulate a draft budget to
the members of the events committee
3. Do you think either of the budget options
presented meets the charity organisation’s
stated goals? Why/why not
4. What recommendations would you make
to the event committee to help them
achieve their goals
5. Once the final budget has been approved,
what information do you need to
communicate to your team, the event
committee, internal ticket sales staff and
external agencies about the final budget
6. After the event, you have to prepare a
report to the event committee on the
outcomes of the gala ball. What should
your report include
7. The NFP organisation are very happy with
the outcomes from the gala ball and want
to hold it again next year. What information
would you collect and record to assist in
preparing budgets for next year’s event
Your response
Through the method of meeting, prepare a
budget statement and submit the draft budget
to the activities committee and other
interested parties.
It is possible to discuss with the members of
the activities committee through the budget
plan and find out where the programs are
inadequate.
Yes
It meets the goal. In the above budget table, it
was $87500.0 before the adjustment of the
total cost, and after the adjustment, it was
$49735.5, which drastically reduced the
budget.
Find other more suppliers and compare the
cost budget.
For the adjusted events, the budget prepared
actual cost income, and finally adjusts the
budget table conclusions.
Most suppliers provide detailed information on
costs.
Record of activity flow sheet.
The number of meetings and their schedules
increase the accuracy of communication with
each other.
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PART 2

Scenario
Mario’s Delicatessen is situated in a major shopping centre between two well-known
supermarket chains and is open seven days a week from 8.30 am to 6 pm. The delicatessen
offers an international range of fresh, frozen and pre-packaged products and specialty breads. It
sells a range of whole roasted coffee beans and has a small café that makes the best espresso
coffees in the shopping centre.

Three brothers are equal partners in the business and share the workload, with all other staff
employed as casuals.

The business has been operating at a food cost of 20% and beverage cost of 18% for the past
12 months. However, in this budget, the brothers want to reduce their cost of goods and bring
food costs down to 16% and beverage costs to 14%. They plan to source new suppliers for their
products, reduce wastage with better stock rotation and careful attention to use-by dates, and
possibly discontinue some of their more expensive product lines.

The expense budget includes an increase in utilities costs of around 12%. New procedures are
going to be put into place to reduce electrical and gas usage to try to reduce the impact of the
price rise.

Casual wage rates are also expected to rise and this has been factored into the budget.

One of the supermarkets will undergo a major renovation from September to November. As the
supermarket will still be operating during the renovation period, the brothers believe this should
have no effect on sales in the deli, so no adjustments to the sales budget have been made.

Mario’s Delicatessen Sales budget 3 rd quarter 20XX

July Aug Sept TOTAL
Revenue
$ $ $ $
Food 22,500.00 $26,875.00 27,930.00 77,305.00
Beverage 8,050.00 9,060.00 11,090.00 28,200.00
TOTAL 30,550.00 35,935.00 39,020.00 105,505.00

Mario’s Delicatessen Expense budget 3 rd quarter 20XX

July Aug Sept TOTAL
$ $ $ $
Wages 16,250.00 16,250.00 16,250.00 48,750.00
Rent 2,840.00 2,840.00 2,840.00 8,520.00
Gas & electricity 1,830.00 1,830.00 1,830.00 5,490.00
Accounting 1,250.00 1,250.00 1,250.00 3,750.00
Insurance 1,500.00 1,500.00 1,500.00 4,500.00
Other overhead expenses 1,900.00 1,900.00 1,900.00 5,700.00
TOTAL EXPENSES 25,570.00 25,570.00 25,570.00 76,710.00

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Task 1: Prepare a revenue budget

1. You must use the “Template_B” given by the assessor to complete this task.

2. Refer to the Task 1.1 in Template_B and Prepare a revenue budget.

3. Based on the information provided, complete the revenue budget for Mario’s delicatessen.

Task 1: Prepare a revenue budget

Mario’s Delicatessen Revenue budget 3rd quarter 20XX

July Aug Sept Total
Revenue
$ $ $ $
22,500.0
Food 26,875.00 27,930.00 77,305.00
0
Beverage 8,050.00 9,060.00 11,090.00 28,200.00
30,550.0
TOTAL REVENUE 35,935.00 39,020.00 105,505.00
0

Food purchases 3600 4300 4468.8 12368.5

Beverage purchases 1127 1268.4 1552.6 3948

COST OF GOODS SOLD 4727 5568.4 6021.4 16316.8

GROSS PROFIT 25823 30366.6 32998.6 89188.2

Less expenses
16,250.0
Wages 16,250.00 16,250.00 48,750.00
0
Rent 2,840.00 2,840.00 2,840.00 8,520.00

Gas & electricity 1,830.00 1,830.00 1,830.00 5,490.00

Accounting 1,250.00 1,250.00 1,250.00 3,750.00

Insurance 1,500.00 1,500.00 1,500.00 4,500.00

Other overhead expenses 1,900.00 1,900.00 1,900.00 5,700.00

TOTAL EXPENSES 25570 25570 25570 76710

PROFIT/LOSS 253 4796.6 7428.6 12478.2

Task 2: Prepare an income statement

1. Refer to the Task 2.1 in Template_B and Prepare an income statement.

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2. Based on the information provided and the results of Task 1, prepare an income statement
for Mario’s delicatessen.

Task 2: Prepare an income statement

Mario’s Delicatessen Income statement analysis 3rd quarter 20XX

Actual Budget Variance Variance

Revenue Jul to Sept Jul to Sept $ %

$ $

Food 73,223.00 77305 -4082 -5.28

Beverage 29,155.00 28200 955 3.39

TOTAL 102,378.00 105505 -3127 -2.96

Less cost of goods sold

Food purchases 14,844.60 12368.5 2475.5 20

Beverage purchases 4,070.93 3948 122.93 3.11

COST OF GOODS SOLD 18,915.53 16316.8 2598.73 15.92

GROSS PROFIT 83,462.48 89188.2 -5725.7 -6.42

Less expenses

Wages 46,555.00 48750 -2195 4.5

Rent 8,520.00 8520 0 0

Gas & electricity 5,125.00 5490 -365 6.65

Accounting 3,777.00 3750 27 0.72

Insurance 4,335.00 4500 -165 3.67

Other overhead
7,568.00 5700 1868 32.77
expenses

TOTAL EXPENSES 75,880.00 76710 -830 1.08

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PROFIT/LOSS 7,582.48 12478.2 -4895.72 39.23

Task 3: Write the responses to the following contents

 Your responses must be based on the outcomes from Task 1 and Task 2 in this
assessment.
12.
Contents Your response
1. What According to Mario's deli budget for the 20XX third quarter,
information contained in the July, August, and September, the gross profit growth is an
income statement are important important performance indicator for the business.
performance indicators for the
business
2. Which
variances are favourable and
unfavourable results for the
business? Give three examples of
each
 Favourable

 Unfavourable

3. What could Internal - Changes in staff

be the possible causes of the External Environment - Supplier price changes and cost
budget variances? Consider what instability
changes to the internal or
external environment might have
contributed to the deviations
4. What actions
(if any) could the brothers take to
reduce the possibility of the
unfavourable variances occurring
again
5. What
adjustments might need to be
made when preparing future
budgets as a result of the
outcomes of this budget

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