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AHCBUS408 Operate Within A Budget Framework Assignment Sample

Instructions to Students to complete the assessment tasks.

There are 3 scenarios included in this case study. Prior to commencing the task, you must read these scenarios and complete the given 8 tasks.

Scenario 1

Case Study

Section 1 - Natural resources (climatic, soil and topographic suitability)

Section 2 - Operational considerations

Section 3 -Marketing (macro- and micro-economic conditions, proximity to markets, distribution and logistics)

Section 4 Income statements 2009/2010 and 2010/2011

Section 5 - Balance sheet 2009/2010 and 2010/2011

Section 6- Development budget for the farm

Scenario 2 Section 1

June quarter Budget

Section 2- Comparative analysis report

Section 3

Profit and loss statement – June quarter

Scenario 3 Section


Assessment Tasks to be complete by the student.

Task 1

Identify at least 2 priorities, in relation to the organisation’s vision and plans. Record these priorities.

Task 2

Identify, and record, the sources of income listed in the above financial records and at least two new sources of income.

Task 3

Reviewed the budgeted income and expenditure and compared to actuals.

Task 4

Estimate the expenditure for new initiatives and expansion. Record these estimates. Request budget variations to suit the organisational needs. Document this request.

Task 5

Compare the actual sales and expenditure figures to the enterprise budget. Provide this comparison.

Task 6

Check the financial reports to ensure the operations are within the forecast limits, adjusting the expenditure to meet the financial targets, as required. Record expenditure adjustments.

Task 7

Record and report the actual and the potential variations in the budgeted income.

Task 8

Develop, and document, recommendations to address the budget variations.


Task 1: Identification of 2 priorities associated with the business vision and plans

Organisational Vision

Acutts’ Family Farm is an Agricultural business conducted through a partnership between S.G Acutt and J.A. Acutt. The vision of the farm is to deliver organic fruits and vegetables to the people living across Australia along with the expansion of the business to other internal markets.

The micro-environmental factors indicating growing demand for wine and increasing household income of consumers indicate a good opportunity for the farm to accomplish the vision. Moreover, expanding the market in the international platform for Australian wine along with a low-interest rate offers a good opportunity for the farm for expansion (Taken from the given Case study). Therefore, Acutts’ Family Farm plans operations and production that would support the business to grow internationally along with expanding in Melbourne.

In the context of achieving the business vision, Acutts’ Family Farm needs to create and follow an effective business plan with aligned objectives and a time frame for assignment file

Objectives associated with the vision

- To increase productivity by 10% by the next 6 months
- To enhance sales margin by 10% within the upcoming 4 months
- To reduce the cost of labour by 20% within the year-end
- To increase the revenue (income) by 25% by the end of the year

Priorities associated with the business vision and plans

It can be analysed from the business that the following priorities must be planned and analysed by the firm to accomplish the objectives and continue the business plan.

- Production of fruits and vegetables should be a prime priority for the firm. This is because the production would help to increase the sale and increase more profit within the planned time. However, it is suggestible to increase the variety of fruits and vegetables in the production to attract more customers and supply the products to more retailers and wine sellers. This would help to expand the market and accomplish higher revenue.

- Secondly, the priority as per the vision is to increase the revenue and sales by Acutts’ Family Farm. Therefore, the business plan must include an effective marketing strategy after analysing the current market trends and external factors. For example, the growth of the wine market offers great scope for the firm to increase its sales and revenue along with market expansion. However, there is a large number of mandarin and grapefruits plants across the globe which increases the competition level for the family business. Therefore, focusing on the quality of the fruits and selling high-quality goods is also a priority to accomplish the vision.

Task 2: Identification of Income Sources for Acutts’ Family Farm with new income sources

The sources of income for Acutts’ Family Farm are the Citrus fruits and Grapes that are produced within the plantation. The production of Citrus fruit includes Naval, Valencia, Mandarins and Grapefruits. The three types of grapes produced and sold by the firm are Gordos, Shiraz and Sultana. The firm also produced processed foods like fruit juice contributing to the income.

Two new Income sources for the company

New income sources that can be included in the business plan are mentioned below.

- A new type of vegetables and fruits can be produced to increase the source of income. The firm can grow different types of vegetables such as lettuce, broccoli, carrots, turnips and beets along with the citrus fruits in the orchard. This would help to increase the income level.

- Increasing the variety of processed foods and beverages can also be suggestible to enhance the overall income of Acutts’ Family Farm. Currently, the firm only produces juice made of Valencia and Navels. The processed beverage type can be increased by the production of juice extracted from other fruits like Grapes and Mandarins.

Task 3: Review of expenditure and budget income to compare them with actual income

In the context of the table presenting the yearly income indicates that the farm accomplished $189530 in the year 2011/2012, which increased by $14505 in 2013. There is also an increase in the total income in the year 2013/14 when the farm accomplished $213100.The total income highly increased in 2016 reaching $239100, which is higher than the initial year by $49570. The maximum income is $250100 accomplished by the Acutt Family Farm is in 2017/2018, which increased by $11000. It can be analyzed from the development budget of the firm that the budget of income from the fruits was $240,000 in the month of April, while the actual income from this source is $96,390. Therefore, it can be analyzed that the actual income is lower compared to the budget income for the fruits in April. On the other hand, the budget income associated with the sales of vegetables at Acutt Family Farm is 116,800. There has been an increase in the actual income denoted by $119,837. Therefore, there is a variance of $3,037 indicating an increase in the revenue. The overall budget profit in the month of April is $31,607, while the actual profit gained is $34,281. A comparison of both indicates a net profit of $2677 achieved by the farm.

Task 4: Estimation of the expenditures for the new initiatives and expansion

In order to expand the operational activities, the farm needs to focus on the financials along with its existing workforce and assets. In this case, the micro-economic and macro-economic conditions are needed to be evaluated accurately which can assist in developing a highly productive operational framework (Pant, 2021). In this case, the total cost of sales for April should be $132180, for May $136265 and for June quarter $408,500. At the same time, clear consideration and focus also should be provided to some of the general expenditures such as; accounting costs, marketing expenses, insurance, and cost of motor vehicles along with the utilities. In this case, the total projected expenses for the expansion could be; $142,056 for April, $162,655 for May and$236,485 for June. Some of the estimates that can be derived from the budget are mentioned below:

- From April to May total sales revenue will increase by $18450

- In the June quarter, the Gross profit level will be $706500

- In between April, May and June, the cost of Accounting expenses will increase by $300 and then by $1300

Requesting the budgeted variations for supporting the organisational needs

It seems that the expansion of the business operations will need certain changes in the financial resources. Additional financial support is needed for accounting, equipment purchases, motor vehicle purchases and other aspects (energywatch, 2021). Financials are required for supporting the budgeted variations in communication development as $6000, for printing & stationery as $2400 along with purchasing of garden equipment of $22354. Through fulfilling the mentioned aspects organisational needs can be met within the timeframe.

Task 5: Comparison of the actual sales and expenditures to the enterprise budget

As per the income statement, it can be recognised that the total actual sales revenue of the farm is $216227 for the month of April. Although, the budgeted sales revenue was $356800 showcases a variance of $(140573). The sales revenue has been reached through the sales of vegetables and fruits only (Mora& Triana, 2018). Although, while considering the budgeted expenditures of the organisation, it seems that accounting costs, marketing expenses, bank charges, garden equipment, tool replacement, insurance and several other components have showcased negative variances due to their less expenditure. For instance, the accounting expenses were budgeted as $2700 and becomes $624 as actual. On the other hand, the marketing cost was projected as $3900 and have become $1490 as actual. Similarly, the expenses for garden equipment, insurance, utilities and tool replacement showcases lower consummation in comparison to their budgeted positions (Igonina et al., 2019). Total actual expenses are $106555 is lower than the actual sales and have a variance of $109672. It reflects that the organisation have managed to earn the intended level of net profit. But in future, the management needs to keep eye on the changes in market dynamics so that the increasing cost of materials and operational expenses can be easily dealt with.

Task 6: Analysis of the financial report for ensuring the operations are within the forecasted limits

As per the financial report, it seems that the total sales revenue for 2009/10 and 2010/11 was $189530 and $204035. According to the June quarter projection, the sales revenue will be $591000. It reflects the projected revenue of the business will be higher in future times. The total operating expenses of the farm was $129000 for 2009/10 and $136900 for 200/11. Here, the operating includes fixed expenses of $48000 and $49400 for the year ended 2009/10 and 2010/11 respectively. As per the budgeted projection, the total expenses will be $94251. Therefore, it seems along with the projected profitability rate the farm have considered the increasing cost of business operations at the same time for gaining more positive results.

Adjusting the expenditures for meeting the financial targets

In order to reach the financial targets within the timeframe, the simplest strategy would be reducing the overwhelming costs and increasing the sales volume at the same time. Some of the expenditures such as; Commission credit card, Motor vehicle expenses seems to exceed the budgeted limit for which such elements should be adjusted accordingly. The adjustments are recorded as below:

(i) The projected expenses of motor vehicles are needed to be increased up to at least $60,000

(ii) At the same time, the management needs to reduce the actual cost of the motor vehicle to $45000.

(iii) The actual cost of the credit card expenses is needed to be reduced to under $1000.

Task 7: Recording and reporting the actual and potential variations of the budgeted income

As per the budgeted report, the projected revenue and actual figures for vegetables and fruits have been provided. The report has reflected a budgeted figure of $116800 as sales revenue for vegetables and $240,000 as sales revenue for fruits. However, the actual revenue for sales revenue of vegetables is$119837 and fruits, it is $96390 showcasing a variance of $3037 for vegetables and $(143610) for Fruits. Therefore, the results clearly indicate that the sale of vegetables is not according to the plan as a huge difference in the budget and actual figures have been noted (Junita, 2018). Whereas, in terms of the sales of fruit the product seems to match the expectations accordingly by showing a positive variance of $3037.

Therefore, based on the results it can be assumed if the rate of sales revenue for vegetables continues to showcase a consistent disappointment the company might need to upgrade the product or change its selling channels. The presentation of the item in the market also needed to be checked, otherwise, it might lose its position from the portfolio list.

Task 8: Analysing budget variations for recommendations

It can be observed that the revenue budget for vegetables in April was $116,800, while the accomplished or actual revenue after selling the vegetables is $119,837. This denotes a variance of $3,037. In the sales of fruits, the revenue budget was 240,000, while the actual revenue is comparatively much lower denoted by $96,390. It indicates a variance of -143,610. The total sales revenue budget in April was $356,800, while the actual revenue is $216,227, which is comparatively lower than the revenue budget. The comparison indicates a variance of -140,573. Therefore, comparing the variance indicates the need to increase sales and revenue for fruits by the farm.

It can be observed that the revenue budget for vegetables in April was $116,800, while the accomplished or actual revenue after selling the vegetables is $119,837. This indicates a variance of $3,037. In the sales of fruits, the revenue budget was 240,000, while the actual revenue is comparatively much lower denoted by $96,390. it indicates a variance of -143,610. The total sales revenue budget in April was $356,800, while the actual revenue is $216,227, which is comparatively lower than the revenue budget. It indicates a variance of -140,573. Therefore, comparing the variance indicates the need to increase sales and revenue for fruits by the farm.

The following recommendations can be adopted by Acutt Family Firm to reduce the variance.

- The expenses can be reduced in order to increase the revenue and influence the variance between the revenue budget and actual revenue from the fruit sales. Reduction in the expenses of utilities and other miscellaneous expenses can help to increase the revenue and profit.

- Increasing the range and variety of fruits within the product would help to increase the revenue and income associated with fruits, which automatically influences the variance scale.


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