Budget and Account Management of Restaurant | Case Study

Budget and Account focusing of Restaurant illustration StudyTraditions LtdQuestion One.Marginal speak to,Comparison in the midst of Traditions Ltd Marginal costing for every incisions and without the eating house incisionWithout the restaurant, the transshipment center is profitable. The line of descent is capable of devising a profit of 9,000. This indicates that the restaurant incision is qualification losses. Even without move the resolute cost incurred by the commercial enterprise into weighation, the restaurant had do a part of -30,500 in that particular plosive consonant alone. This is a high train of loss to be incurred by only one department. Among the other three departments, furnishing is the least profitable. This is because the centre of purchase for resale that ends up being sold is genuinely low. This growings the stock in the store such that remainder stock for the furnishing department is in truth high as comp ared to the other department . By the end of the period, closing stock is more than the opening stock. This indicates that in that respect were fewer gross revenue made in this department during that particular period.Question two.Financial and non- monetary consequences of closing agglomerate the restaurant departmentFollowing the financial position of traditions Ltd go badd in the previous sector, the restaurant department was making losses. This has prompted the circumspection of the store to consider closing down the restaurant department. Doing so, traditions restaurant is allow for be face up with versatile implications, both financial and non financial. death down the restaurant department lead lead to step-down in the overall profits realized. This is because the contribution mete volition increase leading to reduction in profits. This is because fixed cost will be shared among three departments. Since fixed cost per period of measure do non vary by the amount of units produced, the other three departments will take over to incur these costs. This will increase the overall costs leading to reduced profits. As indicated in the calculations of bare(a) costing statement, when the melodic phrase is operating four departments, the total contribution margin was 390,500. On closing down the restaurant, the total contribution increased from 390,500 to 421,000. This performer that a higher contribution margin is to be shared between remaining departments.A nonher financial implication of closing down the restaurant is that the store will be demand to retrench workers. The business will have to pay employees in the restaurant department such as Claude. This will have a negative financial strength on the business. Socially, when a business retrenches workers, customers do not like to be associated with it. In this context, Claude is a re forthwithned chef especially after winning the potato-sculpting competition. This made him famous as he created customer loyalty. Many customers visit the store because of him. Closing down the restaurant will reduce customers who likewise shop in other departments. This will lead to a decline of gross revenue in the other three departments. Reduction of sales will lead to reduction of overall profits in the business (Tennent, 2008).Another financial effect of closing down the restaurant will lead to low selling of the restaurant assets. As indicated, the restaurant has been having challenges regarding its assets such as the dough mixer. callable to poor maintenance of these equipments, they may be valued very poorly. This will limit the store in recovering roughly of the costs.Other than financial implications, the store will also face non-financial challenges as a essence of closing down the restaurant department. One of the main challenges is bad persona of the business which will be brought about by retrenchment of employees. possible customers dislike businesses which often lay of their employees becau se terminating employees employment suggest that the business is no longer profitable. More so, society does not like business entities that lay off employee because unemployment is viewed as bad. These employees have families and other responsibilities to take anxiety of, without their jobs, they cannot. As such, it is viewed as the fault of the store that these families will suffer. Potential customers will not like to be associated with such businesses (Drury, 2006).Question ThreeAs concern accountant, Samantha will be required to prepare, come up and analyze financial teaching for the store. This will be very difficult since she does not have prior experience in anxiety accounting. More so, the alliance does not keep comfortably organized inhabitledge data base. thither is no previous narrative of perplexity information in the ships company and as such, she has to first of all collect her own counselling information. This is rather a very tedious. In her procedure, she will have the responsibility to visit that the worry of the store has to exploit decisions which are substantially informed from now going forward so as to guarantee the stores future profitability, stability as well as its growth.Samantha will have to come up and maintain management information systems as well as financial policies by liaising with the management to provide a expose support service on all aspects of finance. As indicated, Samantha and nearly of the management colleagues such as Albert often argue. More so, the top management colleagues are old and will not for sure understand fully these financial policies so as to come across sound management decision regarding the company.Her role also includes looking into the future. She is supposes to analyze the performance of the business in the olden years and offer advice to the management on how to prevent challenges that the business encounters. Currently, the restaurant department is making losses and as su ch, it is her responsibility to advice the management whether to come together down the restaurant or to put more capital in it so as to make it more profitable as Claude advices. She will be required to make Traditions Ltd adapt to changing environment. The management of the store prides itself on running the store through maintaining the standards of services and customers relationships which is mainly related with a bygone era. This means that the store cannot be able to tear the young middle class people who provide a very significant market. It is her concern to make sure that the store taps in this market so as to increase sales. She should advice the management on toleration new and upcoming trends so that they can be able to make decisions which will inline the store to new trends hence attract more customers.It is her duty to identify departments that need reduction in operational and production costs. or so importantly she should be able to establish better and effect ive strategies so as to take in spending. This will involve reducing the spending habits of some department and increasing others. Each department is headed by a family fragment and in reference to their relationships some of the managers of departments such as Albert will not be willing to reduce their spending habits to increase other departments. Since is a family owned business, sibling rivalry will be unavoidable delivery about more challenges and disagreements among decision makers. centering Information System (MIS) for Traditions Ltd caution information system (MIS) is vital in its role as an divisor of sharing information indoors a business. There are various factors to consider while implementing a management information system at Traditions Ltd (Graham, 2005) (Clarke, 2010).These factors includeThe level of knowledge of the users. Traditions Ltd is a family owned store. The managers of the store are above fifty years of age and most of them have small-minded or no k nowledge of what management information system is. These managers also do not have siblings to act on their behalf. They are required to access the MIS and effectively use it on daily basis. As such, the management information system that can be effective in the store should be easy to use for the management and simple to understand (Khosrowpour, 1997).The trade protection of the system. A secure MIS should be implemented in the store. Since the store is family owned, there may be conflicting interest within the family. A management system should be in such a way that it is candid and each member with access should be able to view what others are doing (Galletta Zhang, 2006).Stock control systemsStock taking is a dish up that requires the making a list of stock with their location and value. A stock control system must be able to show make orders, run stock levels as well as issue stock. The systems should contain information on the value, location, description, reorder levels, quantities, supplies and information on previous stock history (Office, 2009).Inventory turnover is a ratio that describes how many times a business inventory is sold and replaced over a period of time. To engineer the inventory turnover days, the days in the period are split by the inventory turnover formula. Inventory turnover ratio is a key measure for determining the efficiency of the business in management of company inventory as well as making sales from it (Wanjialin, 2004).It can be calculated asInventory turnover =cost of goods sold/ average inventory. Or=sales/inventoryDay sales Inventory is simply the inverse of the inventory turnover ratio figure by 365. i.e.Days Inventory= (Average Inventory/Cost of good) *365Question 4Budgetary curriculumning and control systemBudgetary planning is the process by which a cipher is prepared in an organization. A budget is a plan which is expressed quantitatively for a specific period of time. It can include various items such as a ssets, liabilities, planned sales output and revenues, amount of resourcefulnesss, cash flows and costs and expenses. As a management accountant at Traditions Ltd, budgetary planning is vital in the trading operations of the store. This is a process that will involve identifying objectives, looking for alternatives and collecting information about them and choosing the trump out alternative that suits the store. The final step is to implement the chosen alternatives to achieve the set objectives. In planning the budget, one needs to make sure that the plans are properly quantified, financed and be able to control resource allocation and performance (Plumptre, 1988) (Bogsnes, 2009).The main functions of the management accountant involve forecasting. This is where I am supposed to lay down objective to be achieved at the end of a specific period. Come up with a plan on how these forecasted objectives are going to be realized. Communicate this plan to all members of the departments in details so that they can follow the plan comprehensively. align various departments by keeping an eye on what is happening within the operation of the store. Select a team of managers and supervisors who are going to varan every day activities in the store and make reports. Come up with authorization protocol where every employee should be able to follow. To boost esprit de corps and encourage employees, motivate employees either through giving rewards for best performers or promotions. Evaluate on regular basis the performance of the store to know whether the store is in line in realizing of the set objective (Radev Allen, 2006). roughly of the behavioural problems one might encounter as a management accountant are the unwillingness of some management colleagues as well as other employees in the implementation of the plan. Since this is a family business, and each department is headed by a family member, some of them may be unwilling to support especially when it comes to f inancing. This might result in mistrust, leaving behind some aspects of the plan which will lead to under realization of the objective. Budgets are time consuming and tiresome. As such, a management accountant should be alert to work long hours without pay so as to meet deadlines (Lacey, 2013).The best way to gain budget control in the businesses is through the analytic thinking of variance. There are two types of variance synopsis. One is the fixed outline which does not change with the level of activities within the business. The other one is the flexed psychoanalysis which is prepared in such a way that it can be altered to indicate the actual activity involved. A flexed variance analysis will suit Traditions Ltd. This is because the management accountant should be able to proctor each and every activity that is taking place in the store. existent profits= budgeted profits+ favourable variances adverse variances.For budgetary control to be effective, serious attitudes shoul d be emphasized. There should be clear boundaries between managerial duties and other duties undertaken by employees. Budget targets which are challenging should be determine and more emphasis put on them. Routines for data collection, analysis and describe should be established. Reports should be aimed at respective managers and reporting periods should be evenhandedly short. Time variance reports should be prepared and where they are adverse, action should be taken to get back to favourable (Business The Ultimate Resource, 2003).ReferencesBogsnes, B. (2009). Implementing Beyond budgeting Unlocking the functioning Potential. Hoboken John Wiley Sons.Business The Ultimate Resource. (2003). Beijing Citic Publishing House.Clarke, S. (2010). Computational Advancements in end-user Technologies Emerging Models and Frameworks. Hershey Information Science Reference.Drury, C. (2006). Cost and Management Accounting An Introduction. capital of the United Kingdom Thomson.Galletta, D. , Zhang, P. (2006). Human-Computer Interaction and Management Information Systems Applications. Armonk M. E. Sharpe.Graham, G. (2005). Exploring Supply Chain Management in the Creative Industries. Bradford, England Emerald Group Pub.Khosrowpour, M. (1997). Managing Information Technology Resources and Applications in the World frugality Proceedings of the 1997 Information Resources Management Association internationalist Conference Vancouver, B.C., Canada. capital of the United Kingdom Idea Group.Lacey, D. (2013). Managing the Human Factor in Information Security How to come after Over Staff and Influence Business Managers. Hoboken Wiley.Office, G. B. (2009). The National Offender Management Information System Report. London TSO.Plumptre, T. W. (1988). Beyond the Bottom Line Management in Government. Halifax Institute for Research on Public Policy.Radev, D., Allen, R. (2006). Managing and Controlling Extrabudgetary Funds. capital letter International Monetary Fund.Tenn ent, J. (2008). Guide to Financial Management. London Profile Books.Wanjialin, G. (2004). An International Dictionary of Accounting Taxation 12000 + Entries on Accounting, Auditing Taxation in the USA, Canada, UK Australia eliminate one Sentence Definition Right to the Point. New York iUniverse Publ .