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.

D1

I am going to be talking about how managing resources and controlling budget costs  can improve a businesses performance and how likely it is to improve a business performance to make the business more efficient so that more money can be earnt.


Human resources will need to recruit people who they think will be suitable for producing these cold drinks. Once they have recruited people they will need to have people who can train them and teach them how to make cold drinks. once they are all trained up they will then need to be assigned departments then those departments where either each department has one specific role or each of the departments are all just going the same thing.


Each department will need to be set a budget so that equipment can be bought in that they need to create these cold drinks. They will need to be supplied with the technological equipment things like fobs so that they can have access to their department and access to their computers. They are going to need computers and maybe even a tablet so that they can move round the factory and do checks and have the facility to access either online help or emails from other staff members with out the need of them twoing and throwing from a computer at a desk. they will also need the physical equipment like labelling machines packagers and the machines that create the cold drinks.


 They will alsoo need someone in each department to be in charge of the financial side of things so that the budget for each department isn't blown on unnecessary things and so that their is always a constant pot of money if need be so if their is something expensive they need the department will have to save. That is where financial resources come in because they are in charge of the funds.


each of the four types of resources would be managed by a department manager in each department but that manager would have to report back to the overall manager of the project. so in each department the manager will be in charge of the financial side of their department and they will also manage staff to make sure that they are doing what they are supposed to, they will also be in charge of the department meeting deadlines. Their will also be head mechanics to overlook the machinery so that everything runs smooth.


Financial resources is most likely to improve the business performance because if money is managed well then it will mean the business will be sitting on a bigger pile of money then just scraping buy and not making much profit. if financially they manage to find cheaper substitutes and better machines that will improve production then they wont be spending as much money and getting more back.


The least likely to improve the business is technological resources because not everything has to be done on an expensive computer or tablet when some things can be wrote down on paper which is cheaper than buying a computer. even if it is managed well their isn't a whole lot to manage because once its all set up it kind of runs itself because it would all be ran off a computer programme.


The resources I the middle are more likely to improve performance (if managed well) because they are the main things that create the actual product because with no equipment they don't have a business because they wont have any products to sell because they cant manufacture them without the machinery. With the technological resources they are important so that everything can be managed and they kind of work hand in hand with physical resources because most of the equipment will probably have a technological aspect to use them. If they are both managed well then everything can run smooth so their arnt any malfunctions.


I have found out that by managing resources everything can run smooth because the manager is making sure everyone and every bit of equipment are working correctly and no un necessary costs are being made meaning that the business is loosing out on money as appose to making money. The must do factors are good financial management keeping track of costs and budgets. also good management of human resources making sure staff know what to do and have the appropriate training  theses are important because with out good staff the business wont be as successful and without good financial management things could escalate to the company going bankrupt.

M4

The effect profit has when revenue isn't high


The lower the revenue the lower the profit because the revenue is the money coming back from selling products. and for every product they sell they make a slight profit on it, but wages and bills have to be taken into account and extra costs for if things have broke so the more extra things that need money from the business will mean that the revenue pot of money wont be as big their for if its all added up they may not have actually have the profit money in the total because of the extra costs. For example co-op planned that the sales revenue would be £110,650 and their profit would be £18,338 because of their high predicted sales revenue total, they actually made £80,260 and their profits went into the minuses -(£28,360) so you can see from the numbers that the lower the sales revenue the lower the profit.


How changes to cost impact on profitability


co-op budgeted on what they wanted to spend in some cases they paid less but in other areas they spent a bit more than they planned. The planned to spend £92,312.00 when they actually ended up spending £108,620.00 that means that they have had to pay more out of their pocket meaning that they are spending some of their profit to pay bills.


The cause of the actual


the main factor is that they didn't sell as many units as they planned to sell which means that straight away the sales revenue and profits will go down meaning that they need to bring more customers in so they discount some items and do offers meaning that their profit that they are making on items arnt as big as they would like it to be. they may have had to rise their pay of wages to keep staff their because it might be quite dead meaning that they are getting fed up.

variance analysis

Budgeting and Actual graph

yes it does match the break even point.

calculate break even actual and budgeting

Fixed cost

(Selling price – variable cost)

Budgeting = £5050.50

£5000

£1.49 - £0.50

Actual = £12500

£5500

£0.99 - £0.55

what would happen if budgeting was done badly

Bad budgeting

If budgeting isn’t managed well then there won’t be any money being saved for the business to fall back on if there is some issues meaning that they need to go into some of their money saved for different things. Also there won’t be much money coming in to keep up with rising costs like electricity and insurance etc.… They will also have to make unnecessary cuts to maybe staff which will save them money but could mean they are short staffed which could lead to them not being could open as much meaning less time when they can earn money.