Analyze the reasons why costs need to be controlled to budget. The important responsibilities are to be able to control budgets and costs and also make sure that they are making a positive financial input to the business. Business has costs in which different varieties of finance are used to cover different types of business costs.
You should control costs if you want to earn more money, since the whole world is in recession now if you control costs now you can be in secure place. If still the recession continues we will be in problem so save money in banks and money will be circulated and you can contribute to your country's economy.
If you don’t monitor and don’t control your budget, costs on whatever project or business you are operating could hit the roof and wash away the profits and effect you to have fewer for your workers. An instance of what might happen if you do not manage your costs: Your squad member’s will end up losing £70 worth of paper, however your budget only is asking you for £50 so you have to get the £20 from somewhere else like from your own pocket or asking your family and friends. Managing budget: You will discover that the pencils are £6 more costly than you have sketched, so you will have to adapt the budget to allow that extra £6.
Assessing the variation between what is budgeted and the real costs or sales revenue that has expected is known as variance investigation. If the result is improved than predicted for instance, sales revenue are top or costs are very lower- this difference is known as favorable. If sales are very lower or costs are top than predicted, this variance is known as adverse. Monitoring the difference is very essential as if the business become aware of them earlier enough, there can be changes made to get back on track.
Costs can be classified to be as either being fixed or variable. Fixed costs comprise of normally overheads while variable costs vary with the amount of activity or...
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