Posted: September 13th, 2017

Financial Decision Making in Hospitality Industries

Task 3: Be able to evaluate business accounts (LO 3: 3.1, 3.2, 3.3, 3.4 and M1, M2, M3 & D1, D2, D3)
Scenario
Task 3 [covers learning outcomes 3 and all assessment criteria]
1.    Define trial balance, where does it come from? Explain with a specimen/format example.
2.    Prepare final accounts (balance sheet and Income statement) from the given data.
The trial balance of Mullion enterprise for the year ended 30 September 2007 is as follows:

£000’s    £000’s
Purchases    5200
Revenues        12363
Trade receivables(debtors)    1180
Trade payables(creditors)        550
Distribution cost    920
Administration cost    1650
Inventory 1 October 2006    1620
Bank interest    5
Bank overdraft        220
Wages and salaries-administration    420
Provision for bad debts        52
Bad debts written off    5
Property at cost    3100
Vehicles at cost    900
Plant and equipment at cost    2200
Property accumulated depreciation as at 1 October 2006        750
Plant and equipment accumulated depreciation as at 1 October 2006        520
Vehicles accumulated depreciation as at 1 October 2006        230
Retained earnings as at 1 October 2006        415
Ordinary shares capital £1 shares        700
Other reserves        250
Long term loans 6% redeemable 2012        1500
Bank    350
17550    17550

(Note that figures in the above table are in £000s – thousands)

The following information is also available:
1. The inventory (stock) as at 30 September 2007 has been valued at £1,570,000.
2. As at 30 September 2007, rent owing is £90,000 and £25,000 had been paid in advance for insurance. Both these expenses are chargeable 60% to distribution and 40% to administration.
3. The interest on the long-term loan needs accruing for the year.
4. Tax is to be provided at 20% of profit after charging all expenses and interest.
5. Depreciation is to be provided for the year at the following rates:
(i) Property: 2% on cost, chargeable 50% distribution and 50% administration
(ii) Plant and equipment: 10% on cost, chargeable 60% distribution and 40%
Administration
(iii) Vehicles: 20% reducing balance, all chargeable to distribution.
6. Provision for doubtful debts is to be set at 5% of trade receivables as at 30 September
2007.
7. Administration costs include £350,000 in relation to spending on research and development in connection with a new product. The product is set to go on sale on 1 January 2008 and revenue from the product is expected to cover all costs of production.

Required
Prepare the income statement (profit and loss account) for the year ended 30 September 2007 and the balance sheet as at that date for Mullion in accordance with IASs.

3. Explain the purpose of budget and prepare a cash budget with the given information. These are the information given for Calgon Products, a distributor of organic beverages.
A). the cash balance at the beginning of September is £ 11,000.
B). actual sales for July and expected sales for September are as follows:
July    August    September
Cash sales    £ 6,500    £ 5,250    £ 7,400
Sales on account    £ 20,000    £ 30,000    £ 40,000

Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 80% collected in the following sale, and 7% collected in the second month following sale. The remaining 3% is uncollectible.
C). Purchases of inventory will total £ 25,000 for September. 20% of month’s inventory purchases are paid for during the month of purchase. The accounts payable remaining from Augusts’ inventory purchases total £ 16,000, all of which will be paid in September.
D). selling and administrative expenses are budgeted at £ 13,000 for September. Of this amount £ 4,000 is for depreciation.
E). equipment costing £ 18,000 will be purchased for cash during September, and dividends totaling £ 3,000 will be paid during the month.
F). the company maintains a minimum cash balance of £ 5,000. An open line of credit is available from the company’s bank to bolster the cash position as needed.

Required:
(1) Prepare a schedule of expected cash collections for September
(2) Prepare a schedule of expected cash disbursements for merchandise inventory purchases in September.
(3) Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September.

4. Explain variance (labour, material, and efficiency, overhead) with an illustration and give the reasons for variance with suggestions for control.

Task 3 has 4 questions to answer and I need to have at least Merit for these.

Also I need to send this assignment through TURNITI Plagiarism check so It has to be individual work. ( TURNITI covers all the books and the internet too.)
Thank you so much.

Following guidelines are in the next few pages.
In addition to the above Pass Criteria, this assignment gives you opportunity to submit evidence in order to achieve the following MERIT and DISTINCTION grades
Grade Descriptor    Indicative characteristic/s    Contextualisation

M1 Identify and apply strategies to find appropriate solutions
M1.1 Effective judgements have been made.

M1.2 Complex problems with more than one variable have been explored.

M1.3 An effective approach to study and research has been applied.     To achieve M1:
You will make effective judgements about fundamental concepts and principles that underpin the different sources of finance and financial planning. You will give the verdict as to what extent the findings within the assignment are true, or to what extent you agree with them.

You will provide supporting and contrasting examples to explain a complex issue.

You will also adopt an effective approach to study and research by integrating secondary and empirical examples in the report. In addition, you will use resources to support your arguments which are academically accredited, good quality, up-to-date, relevant and appropriate to the level of this course of study.
(Task 1, 2, 3,4 & 5)

M2 Select/design and apply appropriate methods/techniques
M2.1 Relevant theories and techniques have been applied

M2.2 A  range of sources of information has been used

M2.3 Appropriate learning methods/ technique have been applied    To achieve M2:
You will apply relevant theories in variance analysis and ratio analysis.

You will also use range of sources of information. Range means range in quantity and range in variety. At this level, you should cite and refer 10-15 or more resources from variety of sources including internet, journals, books etc.

You will also acknowledge all resources using correct Harvard Referencing System.
(Task 1, 2, 3,4 & 5)

M3 Present and communicate appropriate findings
M3.1 Appropriate structure and approach has been used

M3.2 Coherent, logical development of principals/concepts for the  intended audience

M3.3 A range of methods of presentation have been used and technical language has been accurately used    To achieve M3:
You will use appropriate academic report format to present the work neatly and professionally maintaining highest academic and professional standard.

You will make sure arguments/theories provided are appropriate to the audience.

You will also use technical language accurately in the context and check the work for spelling errors.
(Task 1, 2, 3,4 & 5)

D1 Use critical reflection to evaluate own work and justify valid conclusion
D1.1 Conclusions have been arrived at through synthesis of ides and have been justified.

D1.2 Realistic improvements have been proposed against defined characteristics for success.     To achieve D1:
You will provide concluding paragraph for each task and an overall conclusion that would derive directly from your analysis. You should justify the conclusion you have reached.

Provide recommendation for further improvements along with risk and break even analysis.
(Task 1, 2, 3,4 & 5)

D2 Take responsibility for managing and organising activities
D2.1 Autonomy / independence demonstrated

D2.2 Activities have been managed
To achieve D2:
You will have demonstrated an effective approach to independent research and study.

You will have met the deadline to submit the tasks. You will also have attended regularly and contributed to class sessions.
(Task 1, 2, 3,4 & 5)

D3Demonstrate convergent/lateral/creative thinking
D3.1 Self-evaluation has taken place

D3.2 Convergent and lateral thinking have been applied

D3.3 Innovation/creative thought have been applied
To achieve D3:
You will write a self-evaluation showing your ability to reflect upon your learning by identifying strengths and areas for improvement in relation to costing and budgeting

You will be conducting a thorough and critical investigation.  This can be done by outlining, comparing and discussing key ideas, explanations, concepts, theories and models associated with the topic area.

The originality of your work will be evident.
(Task 1, 2, 3,4 & 5)

Assignment Brief

Qualification    Unit number and Title
Pearson BTEC Level 4 HNC/HND Hospitality    HNHM 102: Finance in the Hospitality Industry
Student Name     Assessor    Internal Verifier
Shyam Kumar Sharma    F Khan
Date issued    Formative/Interim Submission    Turnitin Submission
10/03/2014    28/04/2014    18/06/2014
Final Submission: 25/06/2014

Guidelines for assignment submission

a.    The assignment has 5 Tasks.   Please read ALL TASKS carefully.
b.    The Interim submission will be for TASKS 1, 2 AND 5 and will cover LO1, LO2 and LO5 of the module.
c.    The Final submission will cover ALL TASKS and Learning outcomes of the assignment.
d.    The Merit and Distinction criteria will also apply to the Interim Submission.
e.    The Interim grade will contribute to the overall grade.
f.    The attendance percentage and participation in class tutorials will contribute towards the achievement of Distinction grade.
g.    Both the interim and final assignments must be submitted on time to be considered for a Distinction grade.
h.    PLAGIARISM is considered a serious offence and will automatically lead to a FAIL grade. In the event of similar/identical submissions, please note that both students will automatically fail the module
i.    When IPADS/TABLETS/MACS are used please make sure documents are saved as .doc. Otherwise submission will not be valid and considered as a non-submission.
Purpose of the assignment: This assignment will enable learners to develop practical understanding of the accounting techniques used to control costs and profits, and to support in making effective managerial short-term
Decisions.

Report: assignment will get the students understanding of the sources of funding and income generation for business and services industries. They will also understand business in terms of the elements of cost and how to analyse business performance by the application of ratios.

Through assignment they will have opportunities to investigate control systems, income generation and methods of measuring and analysing performance.

On completion of the assignment, learners will be able to evaluate business accounts and apply the concept of marginal costing.

Assignment will also ensure that their evidence relates to the hospitality industry.

Assignment Title    FINANCIAL DECISION MAKING IN HOSPITALITY INDUSTRIES
Scenario: you are expected to explain these questions with numerical data to show the evidence and application of these tools in decision making process wherever applicable. Further for one task you will need to download the annual reports of company for 2 consecutive years, preferably 2012 and 2013 and accordingly answer the questions as asked

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