please do detailed answers when needed.

74667(1)(1).docx
Assessment 1
Annual Budget
        Particulars
         Previous Year
         October
         Standard
         Annual sales
         1,438,232.00
         142,843.00
         1,635,266.66
         Expenses
         183,488.00
         137,817.75
         1,288,193.00
         Yearly profit
         1,254,744.00
         5,025.25
         347,073.66
        Fixed expenses
         857,613.00
         Investment
         84,000.00
         Petrol
         170,000.00
         Variable expenses i.e. Fish food
         176,580.00
         Total
         1,288,193.00
Financial risk is that risk in which there is a significant possibility of losing money on investment made by it in order to control the expenses or increase the revenue of the company. The company has made an investment of 84,000 in order to reduce the expenses of petrol by 15% and thus there is a possibility that the company will end up in getting nothing if the investment fails to control the expenses.
There can be operational risk when the management of the company has not required skills enough to increase the efficiency of business operations. It can be proved from the fact that the budgeted profit of October month of last year is more than the actual profit. Hence, the company can suffer high financial risk due to such poor management.
Protection strategies can be done with the following ways:
a. Make sure that the probability of net present value of investment is highly profitable and then only invest a significant amount in it.
b. Sound management should be appointed to increase the efficiency and productivity of the business operations.
c. Sales should not be made on credit basis as it will increase the credit risk of the company and make it prone to numerous defaults.
74667(2)(2).docx
Assessment 2
        Particulars
         Budget
         Actual
         Sales
         162,750.00
         142,843.00
         
         
         
         Boat expense
         
         
         Petrol & Oil
         50,000.00
         50,000.00
         Depreciation of cod boat
         5,000.00
         5,000.00
         Cod Boat Reg & Ins.
         2,500.00
         -
         Depreciation of Outboard boat
         1,250.00
         1,250.00
         Outboards Reg & Ins.
         1,450.00
         7,250.00
         Repairs to cod boat
         4,500.00
         -
         Mobile phone expenses
         1,250.00
         1,150.00
         Wages, Superannuation, sick leave
         36,000.00
         34,400.00
         
         101,950.00
         99,050.00
         
         
         
         Cos Net Expenes
         
         
         Repair to cod nets
         5,500.00
         3,000.00
         Fish food expenes
         20,000.00
         16,350.00
         License fee
         2,000.00
         10,000.00
         
         27,500.00
         29,350.00
         
         
         
         Vehicle expenes:
         
         
         Petrol, Oil & Tyres
         750.00
         510.00
         Depreciation of vehicles
         1,700.00
         1,700.00
         Vehicles Reg. & Ins.
         400.00
         -
         
         2,850.00
         2,210.00
         
         
         
         Administration expenes
         
         
         Post box hire
         10.00
         -
         Depreciation of Office equipment
         250.00
         250.00
         Stationery
         25.00
         100.00
         Electricity
         70.00
         55.00
         Fishing Association
         250.00
         250.00
        Misc
         
         15.00
         Sickness & Accident Ins.
         2,500.00
         2,500.00
         
         3,105.00
         3,170.00
         
         
         
         Finance
         
         
         Interest
         3,200.00
         3,312.50
         State Payroll Tax
         100.00
         600.00
         Bank charges
         150.00
         125.25
         
         3,450.00
         4,037.75
         
         
         
         Total expenses
         138,855.00
         137,817.75
         
         
         
         Budgeted Profit
         23,895.00
         5,025.25
    
        Particulars
         Previous Year
         October
         Actual
         Standard
         Difference
        Curray Mod
         42,300.00
         3,525.00
         9,450.00
         9,517.50
         -67.50
         Annual sales
         1,438,232.00
         142,843.00
         384,377.00
        408,816.67
         -24,439.67
         Expenses
         183,488.00
         137,817.75
         332,362.00
         385,048.25
        52,686.25
         Yearly profit
         1,254,744.00
         5,025.25
         52,015.00
        23,768.42
        28,246.58
        
        
        
        
        
        
        Working Note:
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
         Fixed expenses
         214,403.25
        
        
        
        
         Investment
         84,000.00
        
        
        
        
         Petrol
         42,500.00
        
        
        
        
         Variable expenses i.e. Fish food
         44,145.00
        
        
        
        
         Total
         385,048.25
        
        
        
        
Part 1.
a. The budget figures differ from actual figures by a margin. The sales revenue variance has come to be 24,439.67 in adverse and expense variance has come to be 52,686.25 in favourable. Management should pay adequate attention in improving the sales variance. Sales variance can be improved either by increasing the sales price of the product or by increasing the sales volume. The company can make the product more attractive in order to increase its price in the market or can provide the same quality goods at a cheaper price. Both these actions will result in increasing the sales revenue of the company and thus improves the sales variance. The management may make the advertisement campaign in order to make the customers aware about the product of the company and to increase the sales volume of the company.
b. The budgeted figures have been underestimated in term of cost and overestimated in terms of sales revenue. The actual cost of the company is lower than the budgeted cost i.e., means either the company has not prepared the budget properly or take appropriate cost reduction techniques during the production or operation phase. The management should find out the reason of such variance and if it is found that the budget has not been prepared properly, then management should take reasonable steps to correct the budgeting process.
c. The business aims to achieve an increase in profit margin by 8% and the same has been happened as the company has performed well in controlling the cost of the company. The company has favourable cost variance which is a result of adoption of appropriate cost reduction techniques and eliminate unnecessary expenses in order to optimise the utilization of resources.
Part 2.
a.
As from the above chart, it can be summarised that actual annual sales is less than budgeted annual sales due to sale of low volume of products to the customers. Actual expenses is less than the budgeted expenses due to adopting appropriate cost reduction techniques. Actual profit is greater than the budgeted profit as the decrease in cost is more than decrease in sales revenue to increase the profit of the company by a significant margin.
b. The sales revenue variance is 24,439.67 in adverse which is caused due to low amount of catching of fish due to utilization of primitive equipment. The company should make use of better equipment in order to increase the catching of number of fish.
The expense variance is 52,686.25 in favourable which indicates the company is quite efficient in controlling the costs of the operation of the business. The company has put into effect effective cost reduction techniques in order to reduce the costs of operation and thus to increase the profit of the business.
c. Recommendation to Patrick:
i. The company should make use of latest equipment in order to increase the catching of number of cod fish.
ii. The company should take tenders from suppliers and choose supplier who provides the least quotation and high-quality goods.
iii. The company should reduce the wastage of the resources in order to do the optimum use of the resources.
iv. The company should train the staff personnel in order to increase the efficiency of the operation of the business.
v. The company should increase the market area in which the products could be sold by identifying the needs and demands of such market through market surveys.
vi. The company should ensure that Just-in -Time method for inventory holding should eb adopted in order to minimize the inventory carrying cost or holding cost.
vii. The company should make ensure that penetration pricing policy has been adopted for the pricing of products.
d. Patrik is still on the track because he has done better utilization of the resources of the company as the actual profit is better than the standard profit set by the company. The company has adopted correct cost reduction techniques in order to reduce the cost of the company. It helps to enhance management performance or efficiency...