# Manage Budgets and financial plan

1854 Words8 Pages
Activity A - Important Notes:
According to company strategic plans, the company aims to achieve a net profit before tax of \$1,000,000. The chief risks to this goal are: poor sales due to economic downturn increases in expenses such as wage expenses.
In addition to Australian operations, the company is considering manufacturing overseas to take advantage of reduced costs. The company is also considering diversifying its product range to reduce exposure to poor sales of one product.
Sales Information
Q2 = \$1 million.
Q1, Q3, Q4 = Q2- 30%
Commission negotiated with members of the sales team is now set at 2.5% of sales.
Q2 depend on completion of 100% of repairs and maintenance.
So:
Q2 = 1,000,000
Q1= Q3= Q4 = 1,000,000 –
So:
FY= 77.500
Sales Centre A = 77.500 * 50% = 38.750
Sales Centre B = 77.500* 25% = 19.375
Sales Centre C = 77.500* 25% = 19.375

As the Sales Centre A expected to make 50% of total sales, the wages, telephone and office supplies should be adjust as well.
As prevision on the Master Budget, I could calculate the division of Sales Centre expenses. Each quarter accounted for certain percentage: Q1 = Q3 = Q4 = 17.500/ 77.500= 22.58%.
Q2= 25.000/ 77.500= 32.26%

Original Sales Cost Centre expense budget

Sales Centre A
Sales Centre B
Sales Centre C
Commissions
\$20,000
\$20,000
\$20,000
Wages
\$100,000
\$100,000
\$100,000