HR7003 Demonstrate an understanding of different markets and sources of finance; and the role of budgeting in an organisation.

Managing Financial and Human Resources for Sustainable Business Success

Learning Outcome 1: Demonstrate an understanding of different markets and sources of finance; and the role of budgeting in an organisation.

Learning Outcome 2: Be able to assess budgets based financial data to support organisational objectives (CMI Los 2).

Learning Outcome 3: Analyse the information contained in a company’s annual report; and appraise finance and investment decision.

Learning Outcome 4. Demonstrate an understanding of the context within which accounting operates, and the various local and

international standards that need to be complied with.

Learning Outcome 5. Effectively apply budgets and investment appraisal techniques.

Learning Outcome 6. Effectively apply key ratios appropriate for analysing the financial performance of the organisation.

Learning Outcome 7. Understand how to evaluate financial proposals for expenditure submitted by others (CMI Los 3).


The Volksland Motors Group is based in the Northern frontier of Mill-land City, anindustrial estate in the Republic of Zee Land. The company’s planning and actual budgets for December appear below:

The Volksland Motors Group

                                                                        ACTUAL(‘000)         BUDGET(‘000)

Production(q)                                              21 000                        17 000

Revenues                                                     £35,000                      £29,400

Variable production cost:

Direct Material                                              5 000                          4 294

Direct Labour                                                4 386                          3 580

Machining cost                                             4 600                          3 900

Other variable cost                                       9 000                          7 650

Fixed Production cost:

Indirect Labour                                             1 850                          1 601

Depreciation                                                             1 000                          1 000

Insurance                                                         874                             874

Production Taxes                                            463                             440

Administrative Expenses                            2 452                          1 838

Marketing Expenses                                   1 696                          1 080

Research and development                      1 226                             920

Net Operating Income                               £2 453                        £2223


a) From the data above, assess budget and prepare report showing The Volksland Motor Group’srevenue and spending variance for December. Based on this reportwith analysis of profitability ratios, which area/s ofactivity should be of concern to the management and WHY?

b) Outline the importance of possible uses of financial information including cash budgeting by different stakeholders. Showdrawbacks of budgeting and suggest practical ways through which The Volksland MotorGroup’scould go about minimising these?

c) The Executive Board of The Volksland Motor Group after reviewing annual reporthave decided to explore options tofulfil objective of green energy. Director production has suggested to use of solar panels to reduce energy cost and meet green energy objectives. The solar panels require investmentof £600,000after Zeeland Govt grantwith useful life of 25 years. This investment will save annual energy cost by £120,000.Solar panels require annual maintenance cost of £10,000 after three years of use. Recommend theviability of this investment using appraisal technique (NPV, Payback, Discounted Cash Flow etc)that company could employ in evaluating their options in this respect (based on their circumstances). It is noted that cost of capital is 10% and inflation is 4% in Zeeland.

d) Evaluate by demonstrating an understanding of different sources of finance available to The Volksland Motor Groupto fund solar energy project. Explain the measures they can/should adopt to ensure sustainability in their operations

The word count for this assignment is 1,500excluding title page, executive summary, contents page or bibliography.

It is important that you show knowledge of key debates within the wider literature. Also, it is strongly advised that you are critical in your writing and ensure a good level of integration and coherence in applying theories. Please work on, and ensure an excellent level of criticality, coherence, and flow of your report. This will require effective discussion and clarity.

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