U3 Financi Forecting, Set Assignment

Pearson BTEC International Level 2 Award, Certificate, Extended
Certificate, Diploma
June 2023 – Version 1

Recommended time 10 hours
Paper
reference 60410P
Business
UNIT 3: Financial Forecasting for Business
Pearson Set Assignment Brief
Single Part Assessment
You do not need any other materials.
For use with:

Pearson BTEC International Level 2 qualifications in Business
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Instructions to Learners
Read the Set Assignment carefully.
You will be asked to carry out specific activities using the information provided. You will
be given a specific time period to complete the assignment.
At all times you must work independently and must not share your work with other
learners. You must complete an authentication sheet and submit this along with
your work.
Set Assignment Information
Vincenzo’s has been operating as a successful Italian restaurant for over 30 years, offering
only the best quality food at affordable prices. During this time, it has built up a strong
customer base, as the business is located on a busy street in a suburb of a popular
university city. The area is supported by a range of local businesses that provide goods
and services to meet the needs of a range of customers, including families, students and
tourists.
In addition to the restaurant, the business owns and rents out a student flat at the back
of the restaurant building. This provides an additional source of revenue for the current
owner, who is now looking to retire and hopes to sell the business.
You have been working part-time at the restaurant, while studying Business & Finance
and are considering your options regarding jointly taking over the business with two
other friends from college.
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Set Assignment
You must complete ALL activities.
ACTIVITY 1
You have just been given access to existing supplier information and financial records.
Having looked at these, you recognise there will be many costs involved in taking over
the business. Much of the existing equipment, including the pizza oven and restaurant
fixtures/fittings, is outdated and will need to be replaced before you could open up
the restaurant.
Prepare a presentation for your friends stating the meaning of different costs, providing
examples for the business you are hoping to take over to show the differences in the
types of cost:
• start-up costs
• operating costs
• variable costs
• fixed costs
• the potential sources of revenue for the type of business you are hoping to take over.
You have decided to use some of the existing financial records to help you decide if the
business has the potential to make a profit.
Sales quantity 1 000

Selling price $15.00
Cost of sales $8 000
Mortgage $1 000
Electricity $1 500
Wages $3 000
Insurance $200
In this section of your presentation, you should:

• calculate gross and net profit from these figures and clearly explain the difference
between these terms
• analyse the importance of costs, revenue and profit to help you to understand how
you could make the business a success
• examine the data/information provided to make a number of justified
recommendations about how the business could improve its profit by either
minimising costs or maximising revenue.
This activity covers learning aim A.
A.P1, A.P2, A.P3, A.M1, A.D1
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ACTIVITY 2
You are happy with the work carried out so far and are keen to understand more about
financial forecasting and how it can help in deciding on the likely success of
your business. You agree that the next step is to produce a number of
documents including:
• a report describing the purpose of using break-even analysis for the restaurant
• an annotated break-even chart using the following data regarding the sale of the
most popular Vincenzo’s house special pizza.
Fixed cost per month $3 150
Variable costs per pizza $8.00
Selling price per pizza $15.00
Expected sales of pizzas per month 1 000
The chart must be clearly presented, labelled and should show:

• areas of profit and loss
• break-even point
• margin of safety.
You have decided to show the impact on the break-even point if either of the following
were to happen:
1. Fixed costs were reduced to $2 800 (all other figures remain the same)
2. The selling price was increased to $17.00 (all other figures remain the same).
Add this information to your report by recalculating the new break-even points using
formula and break-even charts.
This activity covers learning aim B.
B.P4, B.P5, B.M2
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ACTIVITY 3
The existing owner does not offer a delivery service, but you are considering expanding
the business by offering an outside catering and delivery service. For this, you will need
a delivery van, which you hope to purchase using a bank loan. The bank has asked for
some information in relation to a cash flow forecast in order to support the loan. This
should include the cost of a new pizza oven and fixtures/fittings you would need to
purchase, as well as the cost of a loan to purchase the delivery van, which you would pay
monthly from March onwards.
You have now reviewed all of the revenue/costs:
January February March April May June
Sales ($) 14 000 15 000 17 000 16 000 15 500 18 000
January February March April May June
Raw 11 000 13 000 13 000 11 000 10 500 14 000

Materials ($)
Purchase of equipment: $4 000 in January

Rent received from flat: $500 per month
Delivery van: $400 per month from March
Petrol: $300 per month from March
Staff wages: $2 000 per month
Delivery driver wages: $800 per month from March
Marketing: $100 per month, increasing to $150 in March to advertise delivery service
Utilities: $300 per month, increasing to $400 per month from March
Opening bank balance: $500
Produce a final section to your report to include:
• a six-month cash flow forecast
• an outline of the purpose/benefit of completing a forecast for the proposed
business venture
• an explanation of the actions that could be taken to improve the cash flow forecast,
showing the impact on the closing balance
• a conclusion to evaluate the use of a break-even analysis and cash flow forecasting
when you take over the business venture. Your conclusion should consider the
implications and benefits of using both tools to help with business planning.
This activity covers learning aim B.
B.P6, B.P7, B.M3, B.D2
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Assessment criteria
Pass Merit Distinction
Learning aim A: Explore the costs and revenue of a

business to calculate profit
A.P1 State the difference
between start-up and
operating costs, variable
and fixed costs for a
business organisation. A.D1 Recommend how
A.M1 Analyse the a business organisation
A.P2 Identify the different importance of costs, could increase profit.
sources of revenue for a revenue and profit for a
business organisation. business organisation.
A.P3 Explain the difference
between gross and net
profit for a business
organisation.
Learning aim B: Explore break-even analysis and cash
flow forecasting
B.P4 Describe the purpose
of using break-even analysis
for a business organisation.
B.M2 Demonstrate the B.D2 Evaluate the
B.P5 Calculate break-even
impact of changing cost importance of break-even
using given data.
and revenue data on the analysis and cash flow
B.P6 Prepare a cash flow break-even point. forecasting for a business
forecast using monthly organisation.
B.M3 Analyse the impact of
data.
weak and strong cash flow
B.P7 Outline the purpose for a business organisation.
and benefit of cash flow
forecasting for a business
organisation.
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Pearson BTEC International Level 2 Award, Certificate, Extended

June 2023 – Version 1

You do not need any other materials.

For use with:

Sales quantity 1 000

In this section of your presentation, you should:

Fixed cost per month $3 150

Variable costs per pizza $8.00

Selling price per pizza $15.00

Expected sales of pizzas per month 1 000

The chart must be clearly presented, labelled and should show:

January February March April May June

Sales ($) 14 000 15 000 17 000 16 000 15 500 18 000

January February March April May June

Raw 11 000 13 000 13 000 11 000 10 500 14 000

Purchase of equipment: $4 000 in January

Pass Merit Distinction

Learning aim A: Explore the costs and revenue of a

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