The first goal of most organizations is survival. In order to survive, they must be able to generate sufficient revenues to cover their expenses. The second goal is profits. Profits allow organizations to grow and improve. To evaluate how the organization is doing, department revenues and expenses are monitored each month. Organizational revenues and expenses are monitored each quarter. In this course we discuss revenues, expenses, profits, departments, budgets, etc.
For this assignment, you will be divided into groups of six or seven. Each group is one organization with six departments. (each group member represents a department).
As in an organization, each department (individual) will keep track of all revenues and expenses for the period of September 1/20 to November 30/20. Revenues are any money that you earn from part time jobs, help from family or friends, scholarships, CERB, EI, etc. Expenses are anything that you spend including rent, food, drinks, clothes, transportation, etc.
At the beginning of each month, (September, October and November) you will prepare both a projected (i) department and (ii) organization budget for the month. This will show what you expect to earn and spend. At the end of each month, you will prepare actual (i) department and (ii) organization summaries of revenues and expenses, what you did earn and spend.
The summary at the end of September will include only September’s revenues and expenses; the summaries at the end of October and November will be cumulative and show both the current month and the cumulative results from Sept 1 to present. Keep notes throughout the month, as you record your revenues and expenses. Pay attention to the amount of funds coming in and the amounts going out. A few questions to keep in mind are:
1- Are the departments in a profit, loss or breakeven position?
2- Is the organization in a profit, loss or breakeven position?
3- What does that mean for the departments and for the organization?
4- What recommendations would you provide to the departments and organization to improve?
Drawing on what you learned in this course, provide three recommendations to the departments and organization as to how profitability can be improved. For example, stores like Walmart used to have large warehouses to stock goods. They realized that buying goods in advance and storing them in warehouses was too expensive. So they cut out the warehouses and changed the way they order goods. This reduced their expenses.
The above will be written up in a report that is due at the end of the term. The report should include:
both projected and actual budgets for Sept, Oct, and Nov.
what caused the profit or loss
how the profit or loss was dealt with
a description of the monthly cashflow
recommendations for the future.