Allocate Resources

Allocate Resources

West Bay Restaurant is involved in the supply of ovens, fryers, and industrial refrigerators as well as different restaurant furniture. As a finance manager, being engaged in support of upper management with budgeting and financial planning in the organization. The company’s president, Brooke, has asked me to prepare a proper analysis and recommendation that will help the management team to make the best decisions in the organization.

The company should not hire and train 50 more salespeople in addition to the 100 it already has in the organization. Hiring 50 more salespeople will mean an increase in wages cost, which is $ 12 per hour with a 30% commission. Since the demand may fluctuate, to ensure a higher return on investment in the market, it is essential to ensure that the available 100 salespeople have been adequately trained on the best sales strategies for the welfare of the organization. It will, therefore, help to reduce the high cost of burden in the company.

As part of investment decisions, the company should minimize its energy usage that will help in cost reduction, which will help to support different corporate social responsibility goals. Despite substantial upfront costs that are involved in the new energy management system, it will help to reduce cost hence higher revenue generation. $ 50000, which is the upfront cost for installation and training, it will help to save the company $ 10000 per year in the energy costs. Such is part of financial planning in the organization that will be effective in financial planning.

Financial Information

Based on resource allocation, a quarterly operating budget will be best suited for the organization, which will allow efficient maximum resource allocation in the organization. An organization will require to understand different quarterly financial data, which will be vital in business operations.  Some of the main takeaways from the operating budget for their impact on resource allocation would entail sales forecasting estimation, which will be used for revenue projection. Towards resource allocation, expenses amount will also account for some of the key takeaways, which will help to utilize the available resources. Finally, it is essential to incorporate necessary constrained resources that fail to have enough funds to ensure management can consider such a decision. The administration can use such information on informing financing and resource allocation decisions, such as to ensure how the available revenue from sales will be efficiently distributed within the organization.

The capital budget is directly related to the operating budget within any organization as it helps to highlight different aspects that are involved within the business. For example, it will be able to record cash revenue collection, which will be used to cater to short term financial obligations in the market. Besides, such a budget will also involve the recording of all the expenses that are included in the business hence the ability to understand the profitability level. A well prepared operating budget is used to ensure that an organization does not face any liquidity issues in the organization.

The company’s ability to meet short term and long term financial obligations are considered as having attained sound financial stability. Therefore, the organization will mean that there is more revenue generated that expenses that are made in the organization. The organization must, therefore, be in a position to generate more revenue than the short term financial obligation.

Investment decision two concerning the energy management system is the best investment decision that the organization should consider. The company’s time value of money helps to inform resource allocation decisions since it will help to save $ 10000 within the organization. It NPV will be positive, which means that the organization should be implemented for the welfare of the organization. Based on discounted cash flow information, the company should change the unit price of the products to ensure maximum revenue generation in the market.

Based on the current company’s consideration and financial information, the best opportunity for the company based on ROI is when the company can generate enough revenue from available resources. ROI can inform strategies that are related to resource allocation through higher-level profit that is made in the organization.

Therefore, the best course of action for the company is to invest in investment decision two, which will help to make the best investment and revenue generation for the organization. Saving $ 10000 every year is the best course of action for the organization, which will assure investors on the higher return on investment in the market.

Calculations

Investment decision 2

Installation cost $ 50000

Cost-saving $ 10000

In the best ten years, the company will have saved $100000, which can be used for ordinary business operations in the market.