Big Red Bicycle Finance business (2)

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Big Red Bicycle Finance business (2)

Assignment 1

Big Red Bicycle financial Analysis

1A

Changes

The first thing I would change about the budget is the information and format of the budget. It is a requirement of the budget to state the name of the employee who was prepared the budget. The Budget must also state the cost centre which it was prepared for. Without this, the budget is less useful. The time of the budget and the quarterly months should also be explained. The budget would start in July 2011 and finished in June 2011. The quarters are not specified and this can cause confusion, specifically when there are differenced in the quarterly budgets.

Any assumptions that were made about the budget must be stated at the end of the budget or in a different document as there are many discrepancies and factors that would affect the accuracy of the information. This should also talk about any estimation that were made and what the estimations were based upon.

It was noted that the Q3 has more sales than the other quarter years (Q1, Q2 and Q4). This means that the company is more popular during the Q3 period. The company should either spend more money to increase the popularity during the Q3 such as increase marketing or try to increase the sales in the other 3 quarters by spending more money in the Q1, Q2 and Q4 period. The budget should be spread evenly unless the company has specified the increase in a Quarter year. The marketing should be lowered overall because it is too high. This company that is quite small should in the market, should not be spending so much to market their products. The marketing should gradually increase customers and this means not to spend so much.

The revenue section in the q3 should be changed as the quarter has been known to make 30% more sales than the other 3 quarters. This would change most of the revenue factors in the Master budget such as the Cost of Goods sold, Sales, Commissions and Gross Profit.

I also feel that the commissions are too high. Compared to the wages, the commission is quite high and therefore should be lowered to make more profit. The employees are already being paid a fairly sufficient wage and a high commission is not required to keep the performance of the team high.

In regards to the Sales Cost centre expenses budget, the sales centres should have their own specific budgets. Sales Centre A has been proven to perform twice as well as the other two centres and this means that the sales costs of the Sales Centres should by more. Commissions will be increased due to twice the amount of sales, the other expenses are both factors that should be affects as well. The wages of Sales Centre A should also be increase to reward the hard work and performance that Sales Centre A delivers.

Sales centre A will also utilise more utilities such as Phone as it will have a lot of callers as it is more active than the other sales centres.

It is hard to find a balance between profit and marketing as increasing profit will increase expenses. Too much marketing will reduce profit but marketing can also increase sales to improve profit. Therefore the marketing must be constantly monitored to analyse the success and effectiveness of the marketing.

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Big Red Bicycle Finance business (2)
Last updated: Feb 2024

Page 1

lance between profit and marketing as increasing profit will increase expenses. Too much marketing will reduce profit but marketing can also increase sales to improve profit. Therefore the marketing must be constantly monitored to analyse the success and effectiveness of the marketing.

The budget for the repair and maintenance is also not realistic because the sales of Q2 depends on the completion of 90% of the repair and maintenance and therefore the budget does not implied that this is considered in the budget.

Contingency Plan

Company Name: Big Red Bicycle PTY Ltd

Person developing the plan:

Name:

Position: Financial Management

1B

Role-play Support

Required Budget Information

The required budgetary information that an accountant must look at when analysing the financial reports are generally the amount of sales and sale growth of the company. After the sales are analysed the expenses should then be reviewed to find out if there are any ways of reducing the expenses to increase the profit. The work team is not is not performing and there are many factors that could influence the performance. The best way to improve the company’s performance is a full development for every employee to follow.

Organisational Goals

The organisational goals of Big Red Bicycle are fairly regular and standard. The organisational goals are as follow:

  • Grow the business
  • Increase profits
  • Increase sales
  • Increasing variety of products
  • Manufacturing overseas
  • Make a more effective Budget
  • Training and coaching needs

    There are many skills and knowledge that ever team can improve in. The follow skills are the ones that are the most important to have and will affect the image and reputation of the company heavily.

  • Communication
  • Organisation
  • Time Management
  • Initiative to help customers
  • Friendliness and openness
  • Enthusiasm
  • Compliance of policies and procedures
  • Plan coaching and training sessions

    Explain of the budget

    The budget will be explained in detail on how the team members can help the company to reach their budgeted goals. I will set a meeting to…

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    Big Red Bicycle Finance business (2)
    Last updated: Feb 2024

    Page 2

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