Part 1

Task 1

Question a

The review shows that NR, NBH, and NCC made profits Q1 of $974,770, $250,000, and $221,660, respectively. However, NCC made a loss of $7,590 while NR and NBH making a profit of $784,030 and $223,50, respectively, in Q2. The group made a loss in two areas for Q3 for NBH and NCC recording $36,379 and $115,404 consecutively. NR profit improved in Q3 ($887,240) as compared to Q2, but Q1 remains an all-time high.

Question b

The impressive results in first because of the high occupancy rate for the three areas (NR-78%, NBH-68%, and NCC-20%). However, the three branches recorded a decrease in occupancy rate in Q2, which led to dropping in profit for NR (72%) and NBH (58%). NCC made a loss since its occupancy rate dropped 5%. NBH and NCC recorded a further drop in occupancy to 56% and 12%, respectively, for Q3 and thus a drastic increase in loss. However, NR recorded an increase in occupancy rate by 4% in Q3. It led to an improvement in its profitability as compared to Q2.

Question c

The revenue has consistently reduced for two areas (NCC and NBH) for the three quarters because of a reduction in occupancy rate. However, NR has recorded an inconsistent revenue trend, a drop in Q2, and an increase in Q3, with Q1 being the highest. On the other hand, the variable expenses recorded a consistent drop for all areas in the three quarters. However, the drop in revenue reduced group revenue despite a reduction in overall variable expenses for the three periods.

Question d

The Nara Group operates in the service industry and thus liable to Goods and Service Tax (GST). Therefore, the company is required to collect GST from consumers and send it to the Australian Taxation Office with a summary of business activity for GST liabilities and credit. Nara group will record tax liability of 10% for all its revenue.

Question e

To: executiveteam@naragroup.com.au

From: reviewer@gmail.com

Dear John Wayne,

I hope this email finds you and the Nara Group team in good health. I had a great time reviewing the company’s budget for three quarters of 2018. I have few areas for recommendation to ensure that the company achieves the targets for the financial year.

First, the company should increase its promotional and sponsorship activities during Q1 at initial dates to ensure that consumer awareness is achieved early. The promotion should remain active for the entire period regularly. However, the sponsorship should remain minimal and conducted at the end of each quarter to avoid an increase in expenses.

Thank you so much for the opportunity to provide my review input for your 2018 budget.

Kind regards,

M.K Taylor

Question f

Part 2

Question a

Revenue and Variable Cost

Fixed Cost

Question b

According to the sponsorship policy, Nara Group allows a maximum of $30,000 for sponsorship for each department. Therefore, NBH and NCC should spend $30,000 each for the sponsorship. Also, account $2,000 as a promotional material expense to increase the spending limit for the function.

Question c

Question d