Documenting and Negotiating Budget Changes and Contingency Plan for ABC Hotel

Role

1. Document TASK A and TASK B responses from the scenario (Consider Appendix A) 2. Document meeting minutes which should cover the following specifications:

•    Identify areas of the budget that are not achievable, inaccurate or unclear

•    Identify at least two issues for clarification

•    Prepare to negotiate necessary changes to the budget • Set up a time with your manager to meet.

•    Negotiate at least two changes.

 

3. Contingency Plan using the contingency Template

ABC Hotel is a chain of hotel based in Bendigo Victoria.

The senior management structure of the company appears below.

Person      Position

Michelle Yeo CEO

Tom Copeland Managing Director

John Black CFO

Stuart LaRoux    Operations General Manager

Pat Roberts Senior Accountant

Sam Gellar Sales General Manager

Charles Pierce Production Manager

Holly Burke HR Manager

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.  

Role

You are the manager of Hotel Chain  A, based in Adelaide. The centre has achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by your sales team and larger staff, your centre is expected to sell as much volume as the other two sales centres put together. Naturally, you expect cost allocations to reflect the both the needs and importance to the business of Cost Centre A.

The Sales General Manager, Sam Gellar has asked you to review the master budget and cost centre budgets prepared by the Senior Accountant. She would like you to meet with her to discuss the whether the budget projections are achievable, accurate, understandable and fair.  

She would like you to look at the budget for your cost centre closely, note any changes you think are necessary, develop an argument for the changes and negotiate those changes with her.

Information you are aware of includes:

?    Sales in the first quarter (Q1), third quarter (Q3), and the fourth quarter (Q4) are generally 30% less than the second quarter (Q2).

?    Sales in Q2 depend on completion of 90% of repair and maintenance.

?    Sales for Q2 have been estimated to be $1,000,000.

?    Commission negotiated with members of the sales team is now at 2.5%.