Assesment 1 – BSBFIM501A KFC

Assessment Task 1

BSBFIM501 Manage Budgets and Financial Plans

KFC Corporation, based in Louisville, Kentucky, is one of the few brands in America that can boast a rich, decades-long history of success and innovation. It all started with one cook who created a soon-to-be world-famous recipe more than 70 years ago, a list of secret herbs and spices scratched out on the back of the door to his kitchen. That cook was Colonel Harland Sanders, of course, and now KFC is the world’s most popular chicken restaurant chain, specializing in that same Original Recipe® along with Extra Crispy™ chicken, home-style sides and buttermilk biscuits. There are more than 18,000 KFC outlets in 115 countries and territories around the world. And you know what? There’s still a cook in a kitchen in every last one of them, freshly preparing delicious, complete family meals at affordable prices.

KFC was one of the first fast food chains to expand internationally, opening outlets in Canada, the United Kingdom, Mexico, and Jamaica by the mid-1960s. Throughout the 1970s and 1980s, KFC experienced mixed fortunes domestically, as it went through a series of changes in corporate ownership with little or no experience in the restaurant business. In the early 1970s, KFC was sold to the spirits distributor Heublein, who were taken over by the R.J. Reynolds food and tobacco conglomerate, who sold the chain to PepsiCo. The chain continued to expand overseas however, and in 1987 KFC became the first Western restaurant chain to open in China. The chain has since expanded rapidly in China, which is now the company’s single largest market. PepsiCo spun off its restaurants division as Tricon Global Restaurants, which later changed its name to Yum! Brands.

As of 2014, the KFC company has a revenue of over $30 Billion.

Their aim is to capture the fast food market. Basically they want to provide their products to anyone that is why they expending their branches in all over the world. They want to increase their profit through giving maximum satisfaction and other better facilities to people that they want. Now after catching such a marvelous position in the International Market, KFC is introducing a new item “Boneless Fried Chicken”, with even more attractive and charming taste. To establish their positions as the leading western quick service restaurant (WQSR) chain, serving good value and innovative chicken based products. Consistently providing a pleasant dining experience, with fast friendly service, in a clean and convenient location. At all the times, they must be dedicated to providing excellent service and delighting customers such they says “Our passion, as a restaurant company, is to put a YUM on people’s faces around the world, satisfying customers every time they eat our food and doing it better than any other restaurant company”.

Master Budget

A master budget is a comprehensive projection of how management expects to conduct all aspects of business over the budget period, usually a fiscal year. The master budget summarizes projected activity by way of a cash budget, budgeted income statement and budgeted balance sheet. Most master budgets include interrelated budgets from the various departments. Managers typically use these subset budgets to plan and set performance objectives. Master budgets are generally used in larger businesses to keep many managers on the same page.

Operational Budgets

The operational budget covers revenues and expenses surrounding the day-to-day core business of a company. Revenues represent sales of products and services; expenses define the costs of goods sold as well as overhead and administrative costs directly related to producing goods and services. While budgeted annually, operating budgets are usually broken down into smaller reporting periods, such as weekly or monthly. Managers compare ongoing results to budget throughout the year, planning and adjusting for variations in revenue.

Cash Flow Budget

A cash flow budget examines the inflows and outflows of cash in a business on a day-to-day basis. It predicts a company’s ability to take in more money than it pays out. Managers monitor cash flow budgets to pinpoint shortfalls between expenses and sales — times when financing may be needed to cover overheads. Cash flow budgets also suggest production cycles and inventory levels so that a company’s resources are available for activity, not sitting idle on warehouse shelves.

Financial Budget

A financial budget outlines how a business receives and spends money on a corporate scale, including revenues from core business plus income and costs from capital expenditures. Managing assets such as property, buildings, investments and major equipment may have a significant effect on the financial health of a company, particularly through the peaks and troughs of daily business. Executive managers use financial budgets to leverage financing and value the company for mergers and public offerings of stock.

Static Budget

A static budget contains elements where expenditures remain unchanged with variations to sales levels. Overhead costs represent one type of static budget, but these budgets aren’t confined to traditional overhead expenses. Some departments may have a fixed amount of money set in budget to spend, and it is up to managers to make sure such amounts are…