Manage Budgets and Financial Plan 4

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Manage Budgets and Financial Plan 4

BSBFIM501A Manage Budgets and Financial Plans

Assessment 4

Big Red Bicycle

Activity 1

  • Average Debtor Days= Trade Debtors / Sales x 365

    = 362,500 / 200,000 x 365 = 666.49

  • Average Creditors Days = Trade Creditors / cost of sales x 365

    = 80,000 / 1,000,000 x 365 = 29.2

  • Average stock turnover = COGS / Average Stock Value

    Average stock value= Opening Stock + Closing Stock / 2

    = 100,000 + 300,000 / 2

    = 200,000

    COGS = 1,000,000

    Average stock Turnover=1,000,000 / 200,000

    = 5

    Recommendations

    Statement of financial performance – when looking at the statement of financial position and calculating the average of debtor days is too high. This means that the average debts are not being paid quickly.

    The scenario information also states that the business is having financial trouble with debts. The ageing debtors budget can be seen that some debts are not paid after 30 days which is the BRB’s policy.

    It is important for this business to improve its debtors and make sur...

    Manage Budgets and Financial Plan 4
    Last updated: Jul 2022

    Page 1

    e that all debts are being paid on time.

    The 3 sources of information that I used to complete this scenario was

  • the use of the website :
  • scenario information
  • the statement of financial performance
  • Activity 2

    1

  • 2,280,000 fixed costs + $1,000,000 profit target / 250 (profit from each sale) = 9,120

    9,120 bikes need to be sold

  • $285

    2,280,000 fixed costs + $1,000,000 profit target / 8,000 (units in indonesia) = 285

    2

    To reach the expected profit target, there are two possibilities that could happen. Either the business changes manufacturing to Indian where they can manufacture 10,000 and beat the 9,120 units to get more than $1,000,000 profit. The second option is the raise the price to at least $285, and reach the target profit while manufacturing in indonesia.

    The first option is more practical as customers may not want to pay the extra $35, thus the business may not reach the 8,000 units it needs to sell.

    3.

  • Pricing and Cost information
  • Scenario information
  • Activity 3

    All financial records such as GST records must be kept for at least five years

    Activity 4

    Action Plan

    The action plan will be to move the manufacturing to India

    ...

    Manage Budgets and Financial Plan 4
    Last updated: Jul 2022

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