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Business Studies
A budget is how a business manages their money by predicting the amount the company is going to spend. The two types of budgeting our: * Zero budgeting – Urban Fashion will not know how much items is going to cost as the board of directors would not give them a specific amount to spend * Allocated budgeting – Urban Fashion know how much the budget is that they would have to pay things.
In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced). Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. Fixed costs and variable costs make up the two components of total cost. Urban Fashion will have fixed costs to pay their employee’s wages, rents and rates, insurance and advertisements which the same payment is paid out monthly. Also Urban Fashion will have variable costs which they cannot predict how much items will cost.
Variance analysis * Measuring the difference between what is budgeted and the actual costs * If the result is better than expected this variance is known as favourable. This means that Urban Fashion would have been under-budget and will have money left over that needs to be spent. * If the result is worse than expected this variance is known as adverse. Urban Fashion would have spent over the budget and may not have the money to spend it.

A business will monitor the variances to ensure that they can get back on track if there are any issues.

Bidding to increase future resources If a business realises that they do not have enough money available in their budgets they have other options to

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