Leadership And Management

Part A

Ensure each budget you prepare complies with the organisational and policies and procedures as provided.

Case study

You have recently been appointed as the business manager of Houzit Pty Ltd having been a store manager for the past three years. Houzit Pty Ltd is a 15-store retail chain located in Brisbane. Houzit is the leading homewares retailer, catering to the growing need for furnishing new and renovated dwellings in the greater Brisbane area.

The assortment on offer of bathroom fittings, bedroom fittings, mirrors and decorative items together with the recently added lighting fixtures has positioned Houzit as a leader in homewares retailing in Australia. Houzit has grown over the past five years from a single store to the current chain. Houzit prides itself on superior after sales service which has been a key reason for the continued growth in sales and corresponding profit increases. Today Houzit employs over 150 staff.

Houzit Pty Ltd is a proprietary limited company (ACN 34 765 234 02) registered with the Australian Securities and Investment Commission. The registered address is with Houzit’s solicitors (Langs Lawyers, 535 Queen Street, Brisbane, QLD 4000) and the principle place of business is 505 Boundary Street Spring Hill Brisbane QLD 4000.


Computer software requirement

The current accounting information system has not adequately provided sufficient analysis of revenue and expenditure and has made it difficult to make informed estimates of future profits. Estimates have relied on the ‘gut feel’ of the experienced traders on the board and of the senior managers. The board sees the need to apply more analysis to past results that they believe could be done with the introduction of state-of-the-art computer software. Houzit Pty Ltd wants to upgrade their existing accounting system which will manage the company accounts more efficiently in the long run. They request that the new system you recommend to them to be compliant with all legislative and statutory requirements for small to medium businesses.

None of Houzit’s products are GST free however the accounting information system records the GST collected as well as the input tax credits earned on the purchases of stock and assets. These amounts are reported and paid in accordance with the business activity statement (BAS) schedule determined by the Australian Tax Office.

They have 100 fulltime and 50 part-time staff, but only 10 of the staff will have or need access to the financial system. Some staff are paid on a salary sacrifice arrangement that attracts fringe benefits tax. The staff with access to the financial system want software that is a single purchase with no ongoing license fees, and a plan to keep using if for the next 3–5 years, while the organisation continues to grow. They are anticipating that within five years they will have over 250 full-time staff, and at least 20 staff will require access to the financial system by then.

The payroll system deducts withholding tax from the employees and remits this along with the firm’s pay as you go (PAYG) instalment each quarter as reported on the firm’s business activity statement. Income tax return for the company and its annual statement is completed by the firm’s accountant. Taxes and fees due are paid by the due dates. Financial records are kept at Houzit’s principle place of business.

Houzit have just upgraded their computers and have five new desktop PCs which will be used by the finance staff. They are current (for 2017) specification machines with i5 CPUs and 4Gb RAM each, and all have Windows 7 Professional and Norton’s 360 installed with the professional version of Microsoft Office Small Business as well. Other staff will use their machines at various times, so it is important that  the software requires a login to access data and that data stored by the software cannot be accessed in any other way.

Corporate details

Jim Schneider, the CEO, has asked you to prepare some financial budgets for the 2017/18 financial year as a preliminary overview of the financial year ahead. He asked you to first prepare a 12 months budget and then break it up over the four quarters. The areas he is particularly interested in seeing is:

  1. Sales budget for 2017/18 by department by quarter.
  2. Profit budget (including detailed expenses) for 2017/18 by quarter.
  3. The cash flow result per quarter of the GST after adjusting the GST collected by the allowable GST tax credits.
  4. The anticipated aged debtor’s summary at the end of each quarter.

The CEO wants to be given all the budgets except for the aged debtors budget which the accountant and accounts receivable clerk can monitor. The CEO produced a summary of the current business plan that covered the budget year to highlight some of the key goals, objectives and strategies he would like incorporated into the budget.

Rectangle: Folded Corner: Business plan summary
1.	The anticipation that the coming financial year would maintain the same sales growth as the growth that took place between 2013/14 to 2016/17.
2.	To budget for an increase in inflation to 4% per annum and that all costs subject to inflation should incorporate this particular increase.
3.	A new car costing $97,466 including GST has been planned for in the coming period to replace the five-year-old vehicle currently used by the chairman. This fuel inefficient car will attract a luxury car tax.
4.	Sales breakup over the departments is anticipated to be bathroom fittings 30%, bedroom fittings 25%, mirrors 15% and decorative items 10% together with the recently added lighting fixtures 20%.
5.	Profits are to be built on securing a growing customer base which will generate loyalty sales and become the refer other customers to the organisation. The superior after-sales service is the key strategy to achieve this.
6.	Reduction on the principle of the loan by a payment of $100,000 on the 31 December 2017 from the profits generated by the business.
7.	One objective in this plan is to manage the debtors more efficiently in the current period. This will involve an analysis of the debtors to identify ways to reduce the amount of cash tied up in outstanding debtors.
8.	The expectation that 2017/18 would be a difficult trading year but that the budget net profit should target the same result as achieved in the 2016/17. The strategy to achieve this in the business plan included three key elements:
a.	To reduce the expected gross profit rate by 1% on the 2016/17 result in the hope that lower prices on the products would help maintain the sales growth even in difficult trading conditions.
b.	To increase the advertising budget by $70,000 over the 2016/17 results in the hope that Houzit can secure a greater market share in a constricting market. $200,000 is planned for the first quarter with the balance apportioned equally over the following three quarters.
c.	To increase wages and salaries by $172,500 over the 2016/17 amounts in the hope that allowing the existing high number of casual staff to earn commissions on sales that should help to maintain Houzit’s sales growth.

After going through the business plan summary, the CEO gave you the previous year’s financial reports and asked you to speak with the accountant Celina Patel to get some of the figures and detailed expectations for the coming year.

You arrange a meeting with Celina Patel, Houzit’s accountant, and she gives you the following insight into the historical expense relationships and the current statutory compliance liabilities.

Sales and profit budget information

Celina explained that the only budget she monitors on a day-to-day basis is the cash flow budget and the store manager is primarily responsible for the sales budget.

These are the notes you take at the meeting:

  • The overall sales for 2017/18 target set by the business plan should be apportioned across the quarters in the same % as was achieved in 2016/17.
    This was:
Qtr 1Qtr 2Qtr 3Qtr 42016/17
  • Cost of goods sold is the inverse of the gross profit rate determined by the business plan and is determined by the quarterly sales budget.
  • Accounting fees have been negotiated for the year at a fixed amount of $10,000 to be paid in equal amounts each quarter.
  • The interest charges on the bank loan are anticipated at a reduced amount of $84,508 due to an agreed repayment of some of the loan principal. This is to be paid in equal amounts each quarter.
  • Bank charges are expected to be the same as 2017 and paid in equal amounts each quarter.
  • Celina has requested that a new expense (store supplies) be recognised in the new budget that was previously included in with the cleaning expense amounts. Store supplies in the 2015/16 results was $3,500 of the cleaning expense and $3,605 of the 2016/17 result. Cleaning expense will then be lower but identify the real labour costs involved in the cleaning expense.
  • Depreciation is expected to be the same as 2017 and allocated in equal amounts each quarter.
  • Advertising is to be apportioned to each quarter based on the business plan.
  • The following expenses are expected to increase by the determined inflation rate in the business plan summary:
    • Insurance – apportioned in equal amounts each quarter.
    • Store supplies – is calculated for to each quarter using the same % as determined by the sales for each quarter.
    • Cleaning – is calculated for each quarter using the same % as determined by the sales for each quarter.
    • Repairs and maintenance – apportioned in equal amounts each quarter.
    • Rent – apportioned in equal amounts each quarter.
    • Telephone – is calculated for to each quarter using the same % as determined by the sales for each quarter.
    • Electricity – is calculated for to each quarter using the same % as determined by the sales for each quarter.
  • Fringe benefits tax is expected to be the same as 2017 and paid in equal amounts each quarter.
  • Wages and salaries are calculated for each quarter using the same % as determined by the sales for each quarter.
  • The statutory requirements are:
    • superannuation is 9% of wages and salaries for each quarter
    • payroll tax is 4.75% of wages and salaries for each quarter
    • workers compensation is 2% of wages and salaries for each quarter
    • company tax is 30% of net profit before tax for each quarter.

Houzit Pty Ltd
For 12 months ended
Profit & Loss Actuals2013/142014/152015/162016/17
– Cost of Goods Sold6,860,9017,409,7738,002,5558,799,900
Gross Profit5,613,4656,062,5426,547,5456,914,208
– Accounting Fees5,5006,5008,5009,000
– Interest Expense45,00065,00096,50890,508
– Bank Charges1,2001,3001,5801,600
– Depreciation170,000170,000170,000170,000
– Insurance12,50012,50012,50012,875
– Store Supplies
– Advertising50,000100,000280,000280,000
– Cleaning12,56015,65218,70019,261
– Repairs & Maintenance40,25052,60060,00061,800
– Rent2,465,0002,465,0002,465,0002,538,950
– Telephone9,86212,52314,00014,420
– Electricity Expense22,50023,65825,00025,750
– Luxury Car Tax12,400
– Fringe Benefits Tax26,00026,00026,00028,000
– Superannuation148,500160,737166,500171,495
– Wages & Salaries1,649,9981,785,9651,850,0001,905,500
– Payroll Tax78,37584,83387,87590,511
– Workers’ Compensation33,00035,71937,00038,110
Total Expenses4,770,2455,017,9875,331,5635,457,780
Net Profit (Before Tax)843,2201,044,5541,215,9821,456,428
Income Tax252,966313,366364,795436,928
Net Profit590,254731,188851,1881,019,499
Houzit Pty Ltd
Statement of Financial Position
As at 30 June2015/162016/17
Current Assets  
– Cash On Hand50,00055,000
– Cheque Account144,842160,314
– Deposits Paid950,000950,000
– Trade Debtors850,000975,000
– Merchandise Inventory1,530,0001,430,000
Total Current Assets  
Fixed Assets  
– Motor Vehicles At Cost500,000500,000
– Motor Vehicles Accum Dep(100,000)(125,000)
– Furniture & Fixtures At Cost1,950,0002,250,000
– Furniture & Fixtures Accum Dep(650,000)(770,000)
– Office Equip At Cost400,000400,000
– Office Equip Accum Dep(90,000)(115,000)
Total Fixed Assets2,010,0002,140,000
Total Assets5,534,8425,710,314
Current Liabilities  
– MasterCard17,80014,860
– Trade Creditors780,000679,000
– GST Collected1,455,0101,571,411
– GST Paid(943,125)(987,626)
– Superannuation Payable100,000120,000
– Luxury Car Tax Payable20,920
– income Tax Payable364,795436,928
– PAYG Withholding Payable65,00044,872
Total Current Liabilities1,860,4001,879,445
Long-Term Liabilities
– Bank Loans1,608,4591,508,459
Total Liabilities3,468,8593,387,904
– Owner/Shareholder’s Equity500,000500,000
– Retained Earnings850,0001,565,982
– Dividends Paid(500,000)(1,200,000)
– Current Year Earnings1,215,9821,456,428
Total Equity2,065,9822,322,410

Internal auditor

Carl Kerns is one of the directors of the board. Carl said that as a board member they are given the profit and cash flow budgets. He was appointed by the board to conduct an internal audit of operations to look for weaknesses in the internal control system. His report uncovered the following processes that he believed needed to be strengthened.

  • While the overall customer base is increasing from year to year, there may be internal control issues relating to how these new customers are secured.
  • Some discounts that were being given to customers were recorded as a net amount on the invoices and gave no indication of the discount from standard prices.
  • Some cash registers in the stores were not reconciling the cash in drawer with the register printout.
  • Not all timesheet overtime amounts were being authorised by the line manager.
  • Service invoices for some items of equipment were not signed or linked to a purchase order. There was no check that the work had actually been carried out.
  • Not all assets in the stores had unique codes fixed to the asset.
  • There was minimal feedback lines of communication from the shop floor to head office, particularly when an error in the budgeting report process was recognised.
  • Debtor reconciliations were not done monthly and sometimes not at all.
  • In busy times the cashiers that operated the registers were also asked to do their own reconciliations and banking. Sometimes the cash was held in the store for a day or two.
  • Job roles were not clearly defined so that responsibilities and liability can be identified.
  • There was little rostering of duties and cash receipts were not pre-numbered.

Of particular concern to Carl was the directive given by the board to ensure that audit trails were created and maintained. These included:

  • Signing the timesheets for employees under the authority of a department manager.
  • Maintenance of a numbered cash receipts book.
  • Using sequenced cheques as a systematic way of evidencing all monies paid out.
  • Ensuring proper coding of evidenced transactions against appropriate general ledger account and cost centre.
  • Ensuring reconciliations between company books and third-party bank statements are performed.

GST cash flow budget

Statutory requirements for GST is 10% of the recorded amounts in sales. The only capital purchase planned for the year is the luxury car for the chairman. Those expense payments on which 10% GST was paid include the following:

  • Cost of goods sold:
    • accounting fees
    • insurance
    • store supplies
    • advertising
    • cleaning
    • repairs and maintenance
    • rent
    • telephone
    • electricity expense.

The GST amount payable each quarter is the difference between the GST collected from sales and the GST paid – format as per policy and procedures.

CASH FLOW ANALYSIS – GST2017/18Qtr 1Qtr 2Qtr 3Qtr 4
GST Collectedx,xxxx,xxxx,xxxx,xxxx,xxx
Less GST Paidx,xxxx,xxxx,xxxx,xxxx,xxx
GST PayableCalculationCalculationCalculationCalculationCalculation


Debtors ageing budget

The historical records show that the debtors balance at the end of each quarter is usually about 20% of the quarter’s sales. At any time in the debtors balances 1% of the total debtors is overdue 90 days and over, 5% is 60 days overdue, 10% is 30 days overdue and the balance of the total debtors is current. The aged debtors’ budgets are only distributed to the accountant and the accounts receivable clerk.

Houzit Budgeting Policy and Procedures

Budget development process

The standard process for developing budgets will follow the following steps:

  1. Establish the budget objective.
  2. Gather prior period data.
  3. Discuss prior period information and anticipated changes in the budget period with stakeholders.
  4. Research relevant external information.
  5. Incorporate identified trends to determine assumptions and parameters.
  6. Prepare budgets in standard formats.
  7. Submit budgets for approval.


Budget objectives

Houzit prepares budgets to meet various company objectives. Budgets are prepared:

  • for a specific expansion of the business activities:
    • business case to be prepared covering a cost-benefit analysis, market research report and summary profit and investment expectations
  • to outline a specific debt reduction initiative:
    • company-wide summary of profit expectations, planned debt and equity funding arrangements, CAPEX plans summarised
  • annually to cover the next financial year:
    • for the 12-month period from the beginning to the end of the financial year
    • budget to include four quarter milestones in line with seasonal trends identified from prior year data
    • initial preparation includes a preliminary overview of the financial year ahead
    • sales budget for next year to be prepared by department by quarter
    • profit budget (including detailed expenses) for the next year to be prepared by quarter
    • cash flow effect of the GST payable per quarter to be prepared (scheduled compliance payment date is the 21st day after the end of the quarter)
  • To satisfy the statutory requirements relating to the current and short-term solvency of the company:
    • three monthly rolling forecast of cash flows to be prepared
  • To qualify the strategic plans for the next 3–5 years planning cycle:
    • profit and CAPEX budget to be prepared.

Budget variances and schedules

  • Key performance indicators that should be closely monitored and reported on include variances to:
    • total sales
    • gross profit (GP) %
    • wages and salaries as a % of total sales
    • total expenses as a % of total sales
    • net profit in dollars
    • net profit as a percentage.
  • Budget variances will be reported using the standard format provided in this policy and procedures document.
  • Budget variances must be completed within five working days of quarter end.
  • Actual results for the month will be provided by the accounting information system.
  • An analysis of the variance between the actual and the budget must include $ and % variance.
  • Report with explanations and recommendations to be complete within seven working days of quarter end and be given to the CEO.
  • Analysis and investigation of variances will include the following priority:
    • Establish the primary causes for variances to key performance indicators of total sales, gross profit % and net profit $.
    • Establish reasons for those individual items in the variance report that represent the greatest $ variance.
    • Establish reasons for those individual items in the variance report that represent the greatest % variance.
  • Schedules relating to compliance due dates must be prepared and monitored by the accountant. Managers supplying information to the accountant regarding the compliance schedule must submit it at least five working days prior to the due date deadline.

Standard formats

The following formats will be used when preparing Houzit budgets and variance reports.

Sales and profit budgets

PROFIT BUDGET2017/18Qtr 1Qtr 2Qtr 3Qtr 4
– Cost of Goods Soldx,xxxx,xxxx,xxxx,xxxx,xxx
Gross ProfitCalculationCalculationCalculationCalculationCalculation
Gross Profit %CalculationCalculationCalculationCalculationCalculation
– Accounting Feesx,xxxx,xxxx,xxxx,xxxx,xxx
– Interest Expensex,xxxx,xxxx,xxxx,xxxx,xxx
– Bank Chargesx,xxxx,xxxx,xxxx,xxxx,xxx
– Depreciationx,xxxx,xxxx,xxxx,xxxx,xxx
– Insurancex,xxxx,xxxx,xxxx,xxxx,xxx
– Store Suppliesx,xxxx,xxxx,xxxx,xxxx,xxx
– Advertisingx,xxxx,xxxx,xxxx,xxxx,xxx
– Cleaningx,xxxx,xxxx,xxxx,xxxx,xxx
– Repairs & Maintenancex,xxxx,xxxx,xxxx,xxxx,xxx
– Rentx,xxxx,xxxx,xxxx,xxxx,xxx
– Telephonex,xxxx,xxxx,xxxx,xxxx,xxx
– Electricity Expensex,xxxx,xxxx,xxxx,xxxx,xxx
– Luxury Car Taxx,xxxx,xxxx,xxxx,xxxx,xxx
– Fringe Benefits Taxx,xxxx,xxxx,xxxx,xxxx,xxx
– Superannuationx,xxxx,xxxx,xxxx,xxxx,xxx
– Wages & Salariesx,xxxx,xxxx,xxxx,xxxx,xxx
– Payroll Taxx,xxxx,xxxx,xxxx,xxxx,xxx
– Workers’ Compensationx,xxxx,xxxx,xxxx,xxxx,xxx
Total ExpensesCalculationCalculationCalculationCalculationCalculation
Net Profit (Before Tax)CalculationCalculationCalculationCalculationCalculation
Income TaxCalculationCalculationCalculationCalculationCalculation
Net ProfitCalculationCalculationCalculationCalculationCalculation


Sales budget

SALES 2017/18Qtr 1Qtr 2Qtr 3Qtr 4
BUDGET Total BudgetCalculationCalculationCalculationCalculation
Total Sales 16,971,237CalculationCalculationCalculationCalculation
Bathroom fittings30%CalculationCalculationCalculationCalculationCalculation
Bedroom fittings25%CalculationCalculationCalculationCalculationCalculation
Decorative items10%CalculationCalculationCalculationCalculationCalculation
Lighting fixtures20%CalculationCalculationCalculationCalculationCalculation

     GST Cash flow budget

CASH FLOW ANALYSIS – GST2017/18Qtr 1Qtr 2Qtr 3Qtr 4
GST Collectedx,xxxx,xxxx,xxxx,xxxx,xxx
Less GST Paidx,xxxx,xxxx,xxxx,xxxx,xxx
GST PayableCalculationCalculationCalculationCalculationCalculation


     Aged debtors

% Debtors Sales %%%%
Total Debtors%CalculationCalculationCalculationCalculation
30 Days%CalculationCalculationCalculationCalculation
60 Days%CalculationCalculationCalculationCalculation
90 Days%CalculationCalculationCalculationCalculation



The CEO of Houzit Pty Ltd, Jim Schnieder explained that he prefers to discuss the budgets with all senior managers prior to their distribution in order to ensure a corporate view of the strategic plans. He then meets with each group separately to answer questions and concerns about their particular area. Eventually the budgets will be printed in hard copy and bound as well distributed as an electronic spreadsheet.

Upon completion of the budgets you meet with Jim to provide an overview of the information contained within the budgets, the budget notes and recommendations regarding the internal controls to prepare him for the meetings with the senior managers. To clarify his understanding of the information, Jim asks you a series of questions.


Prompt questions

Based on the information provided in the case study answer the following questions in the space provided below:

  1. Identify the current statutory requirements for tax compliance and list and calculate the tax liabilities for Houzit Pty Ltd under taxation legislation. (Length 100 words)
  • Identify the current compliance requirements and liabilities for this organisation under the Corporations Act 2001. (Length 100 words)
  • Review commercially available financial management software to select the most suitable software for Houzit Pty Ltd.

Ensure you diagnose software options by comparing two commercially available software titles against the capabilities of the existing technology for the organisation and against the prioritised requirements and outline the reasons that lead you to this recommendation. (Length 100 words)

  • Explain how you can apply the following principles of accounting in developing the budgets required for this task: (Length 100 words)
    • matching principle
    • account groups
    • time periods.
  • Explain and discuss the implications of probity when preparing and revising budgets. (50 words)
  • List the critical dates and initiatives that will require or generate resources for Houzit Pty Ltd in the next financial cycle. (Length 60 words)
  • List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd. (Length 60 words)
  • List the new or modified internal controls that could improve risk management for Houzit Pty Ltd including the maintenance of audit trails. (Length 60 words)

Part B

  1. Develop a variance report based on the format and template provided by Houzit.
  2. Complete a cash flow analysis on the average length of time it takes Houzit to collect funds from its debtors to determine the trend based on the financial reports in Part A.
  3. Examine the sales budget, profit budget, cash flow budget and debtor ageing summary to identify the following:
    1. Issues:
      1. Identify, describe and prioritise significant issues that are evidenced in the provided case study information and describe reasons or causes of these issues. Include in this issue of financial probity that you have identified or considered when monitoring these budgets. (Length 100 words)
  • Variances:
    • Complete an actual-to-budget variance report, using the template provided in the case study.
    • Identify variances by comparing actual results with the established budget and provide reasons why these variances may have occurred.
  • Performance:
    • Compare financial performance of the organisation (according to financial information provided) to industry benchmarks for this organisation in line with the retail trade sector.
    • Respond to the performance questions provided by the CEO, as provided by the board of Houzit,
    • Determine a trend of the average debtor days and the impact to the cash flow of Houzit. (Length 60 words)
  • Recommendations:
    • Outline your recommendations for ongoing financial viability for the organisation, based on your assessment of the issues, reasons for variances and organisational performance you have identified (Steps 1–3).
    • Include in this section your plans for a revised budget, effectively managing contingencies and issues that have been identified in feedback and monitoring of the budgets. (Length 60 words)
  • Evaluation:
    • Provide a summary review of the financial management processes in place for the organisation, in light of your assessment of the issues, reasons for variances and organisational performance you have identified. Include in this section any recommendations you have for modifying management processes. (Length 50 words)

Case Study

Soon after the end of the first quarter, Jim Schneider the CEO of Houzit, asked you to follow up with Celina Patel, Houzit’s accountant, to see how the actual results compared with the budget you had prepared three months ago. You explained that you had a meeting with Celina that afternoon to get the results and that you would report back as soon as you had done some analysis.

The key questions that the board was most interested to have answered from the budgets and the variance reports were:

  • ‘To what extent do the reports support the view of the board that Houzit is financially viable?’
  • ‘Will we be able to maintain our gross profit margins in the predicted downturn?’

Jim and you both agreed that it had been a tough quarter with the economy still in recession and the impact this was having on the retail sector. Banks are raising interest rates in line with the increased upward international pressure and Houzit has a significant part of their loan funds on a variable interest rate which changes directly with market conditions. Jim was pleased that the sales seem to be holding up reasonably well as first quarter results are generally impacted by factors relating to public and school holidays but he was concerned about the discounts that had to be given to generate these sales.

That’s going to hurt us at some point’ Jim said. ‘Just a pity we could not get into some national magazines this quarter to promote the store offers. I’m sure that would have helped us exceed the budgets you set. I guess we will just have to spend that advertising money in the next quarter’ Jim said. ‘I still think we are running our wages and salaries a bit high. The industry benchmark for wages and salaries is close to 11% of sales’

Jim went on to explain, ‘One of our contingency plans in a slowing economy is to reduce our exposure to debt by applying our profits to the repayment of the long term debt. This will help reduce the interest burden on the business and take some pressure off the diminishing profits. It would also be of interest to determine the impact that our debtors has on the cash flow of the business from 2016/17.’

You are a beneficiary of the company’s profit bonus scheme that is based on the profitability of the company’s financial reports which you are required to prepare. You also prepare the departmental reports that form the basis of the performance review of the managers. You are the manager of the finance/administration and prepare this department’s report as well.

You met that afternoon with Celina and she provided you with the following report on the actual results for the quarter ended 30 September 2017.

Houzit Pty Ltd
Actual ResultsQtr 1
– Cost Of Goods Sold1,955,296
Gross Profit1,415,904
Gross Profit %42%
– Accounting Fees2,500
– Interest Expense28,150
– Bank Charges380
– Depreciation42,500
– Insurance3,348
– Store Supplies790
– Advertising150,000
– Cleaning3,325
– Repairs & Maintenance16,150
– Rent660,127
– Telephone3,100
– Electricity Expense5,245
– Luxury Car Tax12,000
– Fringe Benefits Tax7,000
– Superannuation37,404
– Wages & Salaries410,500
– Payroll Tax19,741
– Workers’ Compensation8,312
Total Expenses1,410,572
Net Profit (before tax)5,333
Income Tax1,600
Net Profit3,733
GST cash flow – Actual Cash flow analysis – GST Qtr 1 GST Collected 337,120 Less GST Paid 279,988 GST Payable 57,132Aged debtors – Actual AGED DEBTORS BUDGET Qtr 1 Sales 3,371,200 % Debtors Sales 22% Total Debtors 741,664 Current 585,915 30 days 111,250 60 days 37,083 90 days 7,417 Total Debtors 741,664

Budget variance report template

According to the organisational policy and procedures, the following format is to be used when preparing a budget variance report.

Houzit Pty Ltd
Variance to Budget
xxx Quarter ended mmm-yyyy
Actual ResultsBudget-QxActual-Qx$
% VarianceF or U
Salesx,xxxx,xxxx,xxxx%F or U
– Cost Of Goods Soldx,xxxx,xxxx,xxxx%F or U
Gross ProfitCalculationCalculationCalculationx%F or U
Gross Profit %%%%x%F or U
– Accounting Feesx,xxxx,xxxx,xxxx%F or U
– Interest Expensex,xxxx,xxxx,xxxx%F or U
– Bank Chargesx,xxxx,xxxx,xxxx%F or U
– Depreciationx,xxxx,xxxx,xxxx%F or U
– Insurancex,xxxx,xxxx,xxxx%F or U
– Store Suppliesx,xxxx,xxxx,xxxx%F or U
– Advertisingx,xxxx,xxxx,xxxx%F or U
– Cleaningx,xxxx,xxxx,xxxx%F or U
– Repairs & Maintenancex,xxxx,xxxx,xxxx%F or U
– Rentx,xxxx,xxxx,xxxx%F or U
– Telephonex,xxxx,xxxx,xxxx%F or U
– Electricity Expensex,xxxx,xxxx,xxxx%F or U
– Luxury Car Taxx,xxxx,xxxx,xxxx%F or U
– Fringe Benefits Taxx,xxxx,xxxx,xxxx%F or U
– Superannuationx,xxxx,xxxx,xxxx%F or U
– Wages & Salariesx,xxxx,xxxx,xxxx%F or U
– Payroll Taxx,xxxx,xxxx,xxxx%F or U
– Workers’ Compensationx,xxxx,xxxx,xxxx%F or U
Total ExpensesCalculationCalculationx,xxxx%F or U
Net Profit (Before Tax)CalculationCalculationx,xxxx%F or U
Income TaxCalculationCalculationx,xxxx%F or U
Net ProfitCalculationCalculationx,xxxx%F or U

Note: F = Favourable, U = Unfavourable


Anticipate that the trade debtors for the 2017/18 financial period maintain the same growth as that which took place between 2015/16 to 2016/17.

Debtor ageing ratio template

Trade Debtors   
Debtor Days   
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