You have received an email from the Chief Executive Officer of Clark Casc Logistics plc, where you are employed as manager of a loading bay, inviting you to the first in a series of budget-setting meetings and asking you to submit a brief report in advance.
For the last financial year Clark Casc Logistics plc made a loss of £3.2million and the Board is therefore reaching out to all managers to find ways of reducing the costs for which they are responsible, ahead of next month’s meeting on compulsory redundancies, early retirements and redeployments to our toxic waste sorting division.
We will be holding a first round of budget-setting meetings on Thursday next week .As the manager of the Craiglockhart loading bay at Clark Casc’s Craiglockhart Loading Bay, the expenditure for which you were responsible for the last financial year was as follows.
|Wages and Employers’ National Insurance and Pension Contributions||528||531|
|Heating and Lighting||30||30|
|Apportion men to f Central Administrative Costs||74||75|
|Insurance Costs–Apportioned Based on Past Claims||20||22|
|Total Expenditure, Tax and Dividends||918||928|
Your expenditure for the first six months of the present financial year is as follows, with a comparison with the budget which, I would remind you, you agreed to this time last year.
|Budget Year to Date
|Actual Year to Date
|Wages and Employers ’National Insurance and Pension Contributions||268||271|
|Heating and Lighting||16||15|
|Apportionment of Central Administrative Costs||40||42|
|Insurance Costs–Apportioned Based on Past Claims||10||12|
|Total Expenditure, Tax and Dividends||469||478|
The purpose of next week’s meeting is not to rake over the ongoing overspend for this year but we need to plan for next year. We are going to need you to agree a total budget of £882,000 for next year. Mo will update the figure for apportionment of Central Administrative Costs sometime after the meeting but I’m guessing it’ll be based on this year’s actual, so I suggest you use that. It’s the rest of the costs we need to discuss with you.
You will need to take account of the 3% across-the-board wage increase Piotr agreed with the unions last week. That applies evenly across all types of staff in the loading bay.
Please provide a report in advance of the meeting detailing how you intend to find the necessary savings.
Please include the following sections in your report. We do not require an executive summary:
- Approach to drawing up the loading bay budget
- Relevant calculations to show that your budget is achievable
- Your proposed budget with full figures
- A conclusion on the achievability of the £882,000 overall loading bay budget
- Recommendations on next steps
Please make sure you provide a list of references to any published external material you refer to in your report.
Make sure your report is at least 2,250 words to prove you’ve done some work but I’m not reading it if it’s more than 2,750 words apart from the references. I will not waste time reading appendices. If you have something to say, say it in your report.
If you have any specific suggestions on improving the budget process, please include these in section 2 – the approach to budgeting – and in your conclusion and recommendations.
In addition to the information in the Chief Executive’s email, you possess the following information.
You are now preparing for an initial budget meeting with the finance director. For next year, you have been asked to seek a reduction in costs overall compared with last year – on top of reversing this year’s increase.
The finance director has already agreed a 3% increase in staff wages for next year –but you have identified some staff positions which may be redundant. You may be able to cut staff numbers by 10% immediately, with the jobs to be cut carrying average wages for your department. Staff cuts can be made by the end of this year, so that redundancy payments do not fall within next year’s budget.
At least 10% of your equipment is also redundant. It could be sold or offered to another department.
You have the authority to switch energy suppliers. You have investigated this and found that an alternative supplier would charge you 5% less than your current rate for the rest of this year and for the first 6 months of next year – but will increase their prices by 3% for the following 12 months and by a further 3% each year thereafter.
You have also discovered that the refrigeration system is in need of repair. A simple repair, which you have already ordered for this year, will cut refrigeration costs by 40%. Improved maintenance will cost just £1,000 extra per year.
The Craiglockhart Loading Bay which you manage adjoins other parts of the depot. You have learned from the manager of Clark Casc’s nearby vehicle maintenance workshop that the workshop has a lot of excess capacity and could operate in a smaller physical space. Your observation is that there is a lot of underused space at the Craiglockhart depot as well.
General inflation for the last 12 months has been 0.8%.
Write your report, addressed to the Managing Director of Clark Casc and containing the following sections, as directed in the Managing Director’s email. Submit your report in the Turnitin dropbox.
- Budgeting Approach
- Relevant Calculations
- Proposed Loading Bay Budget
Your report must be between 2,250 and 2,750 words in length excluding references.
Do not include an executive summary. Appendices are not permitted.
|Length||2,500 words, +/- 10% (excluding references, graphs, charts and numbers in tables.|
|Presentation||Arial12fonts,1½ spacing, left aligned text.|
|References||All references must use the APA Referencing Style and the Napier house style as shown in the library referencing
- Marking criteria and weights
|Report Title ,Addressee and Introduction(section1)||10%|
|Relevant Calculations and Budget(sections3-4)||30%|
|Conclusions and Recommendations(sections5-6)||20%|
|Presentation and Referencing||10%|