D3

D3

I am going to e talking about  of costs,sales and profits and what impacts they have on the business. I will be talking about some of the problems they cause and which is the biggest problem they  and why.



Most of the main problem is once either cost, sales and profits drops it brings everything else down for example when they budgeted they budgets for 100,800 units to be sold when they actually ended up being 100,400 which means that their sales revenue dropped from what they budgeted for it to be £110,650 when it dropped (because of the lack of units sold) to £80,260 meaning that the profit went into the minuses because they would only cover just enough to pay off their expenses and not left to profit because it had to all be spent on wages and other costs.



If costs arnt monitored then the business wont know how much money they have in the pot to spend if they need to do a repair on the store or equipment etc. By managing costs it means that they wont be spending money that could go into the business that could benefit them by earning them even more money because they can invest in things that are going to expand the business. When cost isn't managed it can effect the profit because if they are buying products in that are overly priced then they wont be making much of a profit on them because they wont sell if they are even more over priced then customers wont come to buy those items because they can get them cheaper else where. S if the overall cost of anything isn't managed properly then the business will be loosing out on profits and a chance to expand.



If sales arnt monitored correctly then it can also have an effect on the profit leading to other things being cut costing them more money. For example they predicted that they would sell more units when in actual fact they ended up selling a little bit less. this meant that the predicted sales revenue of £110,650 to £80,260 meaning that because it wasn't monitored it meant that money was all over the place meaning that costs where going up in place where they shouldn't really go up like wages  and other cost because ales arnt up meaning that staff could be loosing interest so the company needs to inspire them to stay on by maybe upping their wages.



Unmonitored profits can lead to the business not having a sum of money to fall back onto because their might not be any money saved up because when a business earns their money they already determined what they are going to spend on buying stock back in so that is took out of the sales not the profit. So its important that profit is monitored so they arnt spending money that they don't have.


The biggest problem is when costs arnt managed because if the costs arnt managed it will have a knock on effect on everything else because more money is going out then expected so its important that costs are managed so that everything can run smooth in the business for example they could end up paying staff more money or the cost of transporting goods. If the cost goes up in certain places then cuts need to be made to compensate for them paying more in different parts of the business.


one solution would be to find cheap suppliers so that if you don't sell enough units your still kind of keeping your money up so that stock can be bough back in so that their is still money coming back in. Also by keeping the costs down on goods it means that some money can go into the shop by making it look nice to get more customers in giving you more business and ultimately leading to more units being sold.


The main problem is that if these things haven't been monitored then it has a knock on effect on everything out so its very important that everything is monitored and if things don't go to plan then cuts need to be made so that everything doesn't drop because one thing has dropped.