Accounting for Management: Sales and operating expenses budgets and budgeted income statement

All requirements are shown on Attachment.

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BTHM Bachelor of Tourism and Hospitality

Management

AFA1105 ACCOUNTING FOR MANAGEMENT 2019 Semester 3 – Summer

Assessment Task 2: Individual Assignment

Due date: Week 10

The assignment must be typewritten in font 12-size and line spacing of at least 1.15. A soft

copy is to be submitted electronically through LMS by the due date and time.

You are not expected to write more than 1,500 words for this assignment.

Marks Allocation:

The assignment will be marked out of 50 marks as allocated against the tasks below.

30% of your assignment score goes into your overall marks for this unit.

AFA1105 ACCOUNTING FOR MANAGEMENT (2019 Sem 3 – Summer)

Student ID:

First Name:

Last Name:

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TASK:

Preparation of sales and operating expenses budgets and budgeted income statement

Mike Tyson is the owner/manager for Lakeside resorts, they have two resorts one in
Melbourne and another in Sydney, they provide accommodation. Mike is about to start
the budget process for 2020.

His marketing manager has contacted customers and analysed market trends and expects
sales in Melbourne to increase by 30 per cent in 2020. In contrast, sales in Sydney is
expected to increase by no more than 3 per cent in 2020.

Mike is very confident that his business will meet the estimated sales growth for 2020 The
sales activity for 2019 was as follows:

Melbourne Sydney Total

March Quarter $1,000,000 $ 800,000 $1,800,000

June Quarter $900,000 $600,000 $1,500,000

September Quarter $800,000 $700,000 $1,500,000

December Quarter $1,500,000 $1,100,000 $2,600,000

Total $4 200 000 $3 200 000 $7 400 000

Operating expenses
Given the expected increase in sales volumes for 2020, the Office Manager has held
meetings with the drivers and sales personnel to identify resources needed to support the
increased activity. To assist their deliberations, the income statement for 2019 was used as
a basis for discussion.

Lakeside Resorts

Income statement for the financial year ended 31 December 2019

Sales $7,400,000.00

Less: Operating expenses

General administration expenses $ 800,000.00

Gas $ 10,000.00

Electricity $ 30,000.00

Wages $1,400,000.00

Sales commission $ 370,000.00

Loan interest $ 50,000.00

Marketing expenses $ 100,000.00

Vehicle-related expenses $2,000,000.00

Depreciation on vehicle fleet $ 800,000.00

Total operating expenses $5,560,000.00

Profit $1,840,000.00

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Wages breakdown for 2019

Annual salaries for the employees are as follows:
Ten Room attenders @ $100,000
One Office manager

Administration staff  2

Marketing staff  3

$1,000,000
$150,000
$100,000
$150,000

Total salaries $1,400,000

Additional information
The following changes are expected in 2020:

• A new enterprise bargaining agreement is expected to be approved which will
increase salaries by 4 per cent.

• Due to uncertainty regarding the cost of fuel an expected increase of 1 per cent is to
be allowed in the budget.

• The fuel is included in the vehicle-related expenses and is 50 per cent of the
expense.

• Utilities are expected to increase by 2 per cent.

• To encourage Marketing staff to boost sales to the expected levels, the sales
commission will increase from 5 per cent to 5.5 per cent of sales.

• Marketing-related expenses are expected to increase 25 per cent.

• General administration expenses are expected to increase by 1 per cent.

• Loan interest and depreciation for 2020 will be the same as for 2019.

Required

You are required to prepare

1. Sales budget
2. Operating expenses budget
3. Budgeted income statement for Lakeside Resorts for 2020

You need to take in consideration revenue and cost changes identified by the business.

Additional Information

The following matters should be given attention:

1. Your assignment must be submitted no later than the Sunday ending week 10 of the

semester. Assessment tasks submitted after the due date, without prior approval or

arrangement, will be penalised by ten percent. Requests for extension of time must be

made with your lecturer and based on Special Consideration guidelines.

2. It is preferred you do your assignment in Microsoft word document

3. This assignment must be handed in for successful completion of the course and will count as

30 marks towards the final mark.

4. Marks have been allocated to each specific section of your assignment.

5. All assignments are to be uploaded to Turnitin

6. Your Assignment should have a cover page your name and your students ID .