Sitxfin 005 Assessment 1 -Short Answers PDF

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Assessment Tasks and Instructions Student Name

Muhammad Umair

Student Number

S1434

Course and Code Unit(s) of Competency and Code(s)

SITXFIN005Manage physical assets

Stream/Cluster Trainer/Assessor Assessment for this Unit of Competency/Cluster

Details

Assessment 1 Assessment 2

Short Answers Project

Assessment conducted in this instance: Assessment 1

2

3

Reasonable Adjustment 1. Has reasonable adjustment been applied to this assessment? No

No further information required

Yes

Complete 2.

2. Provide details for the requirements and provisions for adjustment of assessment:

Student to complete My assessor has discussed the adjustments with me I agree to the adjustments applied to this assessment Signature

Date

2nd Assessor to complete I agree the adjustments applied to this assessment are reasonable Name Signature

Date

Assessment Guidelines What will be assessed The purpose of this assessment is to assess your underpinning knowledge to complete the tasks outlined in the

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elements and performance criteria for this unit of competency and relating to the following aspects: 

business objectives relevant to the management of physical assets: o

profitability

o

growth

o

providing quality products and services to customers

o

adhering to:  



 



codes of conduct environmental sustainability philosophies and practices

o industry accreditation schemes types of physical assets required by tourism, hospitality and event organisations and the organisation in particular: o

buildings

o

computer systems

o

equipment fixtures, fittings and furniture in one of the following:  

accommodation establishments commercial kitchens

  

restaurants and bars storage areas tourism, hospitality and event offices

o

 transportation depots gardens

o

pools

o

rides and games

o

vehicles

o vessels maintenance requirements for different types of physical assets considerations for long-term assessment of physical assets: o ability to meet business objectives o

cost of maintenance over a period of time

o

customer and staff feedback

o

input from specialists where required

o

operational efficiency

o safety equipment specifications to guide acquisition process: o

budget parameters

o

environmental sustainability policies for the business

o

floor plans

o

numbers and types of required equipment fixtures, fittings and furniture

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o

 

 

operational performance requirements: 

efficiency

 

customer traffic staff usage

o types of products and services offered by the business formats for and inclusions of asset registers specified in performance evidence features and benefits of different financing options for asset acquisition: o

hire purchase

o

lease

o

purchase

o rent depreciation that can be applied to different types of physical assets data used in the estimation of asset acquisition: o

current maintenance contracts

o

estimates and quotations from suppliers

o

previous contracts and costs

o published or advertised prices practices to support environmental sustainability using different types of physical assets. Place/Location where assessment will be conducted including timeframes RTO to complete 

Resource Requirements Pen, Paper or computer, internet access Calculator Instructions for assessment including WHS requirements You are required to address all questions to achieve competence. Your trainer will provide you with instructions for time frames and dates to complete this assessment. Once completed, carefully read the responses you have provided and check for completeness. Your trainer will provide you with feedback and the result you have achieved.

Statement of Authenticity I acknowledge that I understand the requirements to complete the assessment tasks The assessment process including the provisions for re-submitting and academic appeals were explained to me and I understand these processes I understand the consequences of plagiarism and confirm that this is my own work and I have acknowledged or referenced all sources of information I have used for the purpose of this assessment Student Signature:

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Date:

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/201

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This assessment:

First Attempt

RESULT OF ASSESSMENT

Satisfactory

2nd Attempt

Extension

– Date:

/

/

Not Yet Satisfactory

Feedback to Student:

Assessor(s) Signature(s):

Date:

   /    /     

Student Signature

Date:

   /    /     

Assessment 1 Your Task: Answer the following questions below. All questions must be answered. 1. How can the following business objectives influence the methods used for managing physical assets in an organisation? Provide 1 example for each:



Profitability

If profitability is the major concern then a detailed ROI will need to be conducted, and the total cost will be a significant factor in the decision. In a different situation, a particular asset may be absolutely necessary in order to provide a certain product or service. In this situation the total cost is less important than the function of the asset and ensuring that it remains operational. 

Growth

If the objective is for business growth, then any asset purchases and management practices will have to take into account product lifecycle and future usage of the assets. Any new assets must have the capacity to account for the future volume of work or activity required, not just the current level of requirements.  Providing quality products and services to customers The assets such as furniture and facilities therefore influence the possible rating that can be gained. Basic appointments will result in a lower rating, which will impact on the price that can be put on a room. Spending more and ensuring regular maintenance activities are carried out can result in a higher rating, which will then allow a higher price to be charged. The return on investment again needs to be calculated carefully.

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Adhering to:



o

codes of conduct

o

environmental sustainability philosophies and practices

External influences may also need to be considered when making strategic asset management decisions. Industry Codes of Conduct and Accreditation Schemes may dictate to some degree how decision must be made. For example the Star Ratings Australia Accommodation Classification Scheme covers a wide range of accommodation and consists of ratings from one to five stars in Australia and New Zealand. One star offers clean basic accommodation, while five stars indicate outstanding international standards. Industry accreditation schemes



When considering a major investment, you will need to conduct thorough research. You will need to justify the expenditure on the basis that it will improve your business. Also, you will need to think strategically in order to prioritise expenditure. While there may be an excellent investment opportunity, if it impacts on your operations so much that your business stops functioning, then it is not worth it. Additionally, you need to realise that many investments can lead to a disruption of operations to some degree, such as an extension to or refurbishment of the premises. The long-term effects must always be weighed up.

2. Provide 8 examples for different types of physical assets required by tourism, hospitality and event organisations: Responses 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Buildings and other structures Vehicles and vessels Equipment Computer and other IT systems Furniture Fittings and fixtures Pool Recreation equipment, e.g. pool table, rides and games Gardening equipment Maintenance equipment

3. List 5 physical assets relevant to your workplace or training and provide the maintenance details typically required for each: Physical asset 1. Buildings and other structures SITVersion 1 ©Futura Group 2017

Maintenance requirements Our guests expect the highest standard of service in

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the restaurant,

2. Vehicles and vessels

3. Equipment

4. Furniture

5. Fittings and fixtures

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The stores area is a highly regulated area, due to the frequency of deliveries coming in and going out to other departments. All of the equipment used there needs to be well looked after and regularly checked for faults. Forklifts and pallet trucks need to be in good working order, otherwise the store persons can’t use the pallet racking they installed last year The POS system incorporates a display system for our menu items, so guests can see what the dishes look like before they order them. our fittings and furniture need to match that standard. The tables, chairs, shelving, sideboard, trolleys and storage all need to be sturdy and functional, yet still attractive and stylish Artworks and other decor add a little something extra to the ambience.

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4. List 6 key aspects which must be considered for the long-term assessment of physical assets in terms of nature of requirements and necessity of acquisition. Who could be typically involved in this in terms of feedback and specialist advice? Responses 1.

Some types of maintenance will be larger scale operations and will occur much less frequently. Major maintenance works need to be carefully planned. They will take considerable time and manpower and also have the potential to disrupt the regular operation of the business to a large extent.

Involvement 2.

Long-term asset maintenance requires well thought-out planning, involving consideration of all the impacts on the business. Often it will require contractors to complete some, if not all, of the work. This means that you, or the maintenance department, will need to work closely with the contractors and supervise the works in order to ensure they are kept to a time limit.

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5. The following are parameters which are used to guide the acquisition of physical assets. Provide examples and details for what should be considered, for each aspect.

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Budget Parameters Has a budget already been allocated for this acquisition? Is the desired asset within the budget? Does the budget need to be adjusted to accommodate the asset? How will that impact on other operational areas of the business?

Environmental Sustainability Policies for the Business Asset acquisitions should fit within the business’ environmental policies. Specifications should be developed detailing emissions, resource efficiency, ongoing resource usage, etc. to ensure appropriate assets are chosen.

Site Plans There may be physical constraints which must be met, e.g. dimensions of access points, or available space for a piece of equipment to fit. It is essential to understand how the asset will be used within the workplace and whether the asset will improve or fit into the workflow. For example a new piece of kitchen equipment might need to fit into a certain area of the kitchen so that it does not interrupt the movement of staff and workflow of items.

Auxiliary Items Different possibilities for a particular asset may need to be analysed for other associated items that also need to be acquired and stored or installed. This may include fixtures, fittings and furniture required to complete or enhance the central asset. The available storage space and other operational impacts may impact in this regard.

Performance Requirements If the asset being acquired is to be used as part of a production workflow or service offering, then you will need to determine the required levels of output and other aspects of its operation. Aspects such as items produced per hour, operational speed, efficiency, volume of customer traffic or staff usage, failure rate, maintenance requirements and other parameters must be developed.

Suitability to Products and Services Offered All assets must be analysed to ensure they will fit with the intended usage. The products and services offered by a business must be considered to ensure that the desired service levels and customer outcomes can be achieved. For example, a vehicle must be suitable for its use, e.g. if conducting offroad tours then a 4wd would be most appropriate.

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6. Which details need to be recorded in an asset register for each physical asset? Responses The code number assigned to each asset can be recorded in a bar code fashion, a copy of which can be physically attached to each asset. This allows for easy recording and quick identification of each asset. This scientific recording method helps to prevent theft and improves the efficiency of stocktaking. The asset maintenance register will hold a record of the maintenance history of each asset. This is essential for any warranty claims and also a reporting requirement under WHS laws. The maintenance record should also indicate the next appropriate time for maintenance, e.g. after 2,000 hours of operation.

7. Provide an overview of the features, advantages and disadvantages of each of the following financing options when acquiring assets: 1. Hire purchase Advantages   

Lower capital expenditure meaning a better cashflow situation Option to purchase item at end of lease Increased flexibility and opportunity for growth

Disadvantages   

Termination of lease may be costly and/or difficult Business does not have full control over assets Maintenance costs on an asset not fully owned by the business

2. Lease Advantages     

Lower capital expenditure meaning a better cashflow situation Avoids risk of fluctuations in market value Increased flexibility and opportunity for growth Assets can be returned so no disposal issues exist Ability to stay updated with latest technology

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Disadvantages     

Termination of these may be costly and/or difficult Rent can increase significantly at lease-renewal Business does not have full control over assets Business misses out on increases in capital gains Maintenance cost

3. Purchase Advantages    

Ownership of asset Increase of equity Potential for capital gains Complete control over assets

Disadvantages   

High risk in acquiring assets Maintenance costs Cashflow can be adversely affected

4. Rent

Advantages     

One-off payment Low capital outlay No risk associated with acquiring the asset No maintenance costs Tax deductible cost

Disadvantages  

High cost per use No ownership

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8. Explain the methods for calculating the depreciation of assets using each of the following methods: Prime cost method

Prime Cost Method The prime cost method (also known as straight-line method) of depreciation assumes that the value of the asset diminishes by a fixed amount every year, over the useful life of the asset. Using the prime cost method to depreciate an asset, you will need to know three things: 1. Cost price 2. Expected useful life 3. Expected residual value The annual depreciate amount can be determined using the following equation: Annual depreciation amount = (cost - residual value) ÷ life The first step is to determine the expected residual value. Your Club might purchase a new wine fridge as a cost of $3,000 including deliver and installation. It could be sold at the end of its life for $1,000. The second step is to determine the useful life. The wine fridge might suit your requirements for five years, after which you would dispose of it. The $2,000 must then be averaged over the five-year lifespan of the asset. This will give you the annual depreciation amount: Annual depreciation amount = $2,000 ÷ 5 = $400 In this case, using the prime cost method, you would depreciate the wine fridge as a rate of $400 p.a., or 20% p.a., over five years.

Diminishing Value Method

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Diminishing Value Method The second method for calculating the depreciation is the diminishing value method. Using this method the depreciation value changes each year rather than staying fixed. The formula for the diminishing value method is: Depreciation amount = base value X (days held ÷ 365) X (200% ÷ asset's effective life) This will tell you the amount to depreciate for the FIRST year. For example, if you purchase a car that has a base value of $60,000 at the start of the financial year and it has an effective life of 10 years, then the calculation would be: Depreciation amount (year 1) = $60,000 X (365 ÷ 365) X (200% ÷ 10) Depreciation amount (year 1) = $60,000 X 1 X 20% Depreciation amount (year 1) = $60,000 X 20% Depreciation amount (year 1) = $12,000 For the second year you then calculate the final Written Down Value by subtracting the depreciated amount from the original value. This then becomes the base value for the second year's calculation. Written Down Value = $60,000 - $12,000 = $48,000 To calculate the depreciation rate for the second year you then perform the depreciation calculation using $48,000 as the base value: Depreciation amount (year 2) = $48,000 X 1 X 20% Depreciation amount (year 2) = $48,000 X 20% Depreciation amount (year 2) = $9,600 The base value for the third year is then $48,000 - $9,600 = $38,400 9. Go to the ATO website link provided below and source the information for the current simplified depreciation rules which apply: https://www.ato.gov.au/Business/Income-and-deductions-for-business/Depreciating-assets/Simplerdepreciation-for-small-business/ Responses Assets depreciate for different reasons. The computer equipment depreciates primarily due to technical obsolescence, which means that the technology will be quickly surpassed by newer equipment. Commercial obsolescence occurs when there is no longer a requirement for the asset due to a lack of need for the product or service the asset provided. The office furniture depreciates primarily due to physical deterioration over the time of its use. The technological advances on office furniture occur at a much slower rate than for computers, therefore obsolescence plays an insignificant role. Pieces of equipment that are in regular use will deteriorate due to wea...