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In this assignment I will talk about why costs and budgets need to be controlled and the advantages and disadvantages of controlling costs and budgets. I will also explain what can happen to a business if costs and budgets are unmonitored.

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Introduction

Investigating Business Resources Introduction: In this assignment I will talk about why costs and budgets need to be controlled and the advantages and disadvantages of controlling costs and budgets. I will also explain what can happen to a business if costs and budgets are unmonitored. Importance of costs and budgets controlling: It is very important for an organisation to control its costs so that it can manage its financial resources effectively. The reason organisation needs to control their costs properly would be that it would end up saving money on expenses and increase its revenue. This will help the company to increase its revenues and this would allow the company to invest more money if required. For example, the business should control its costs so that it saves money and by having the right amount of stock the business can then have the full benefits of selling those stocks and receiving cash which could be used for other areas of the business. In a business organisation, a budget represents an estimate of future costs and budgets. ...read more.

Middle

* It helps in developing a team spirit where participation in budgeting is encouraged. * It serves as a basis for evaluating the performance of managers. The problems which can arise if the costs are left unmonitored are that the amount spend on expenses will be too much and this will decrease the profit which the business makes. The business also wouldn't be able to achieve their targets so it could be difficult to identify what was the cause. If businesses doesn't control their budget then serious mistakes can occur for example, a business might have bought too much stock and this means that the stock would be left in the stock room, it may go out of fashion, then the business will have to put reduced offers on the stock, so therefore the business will loose money because they selling the products below cost. Over-expenditure: Over-expenditure is where businesses spend more than they estimated at the start of the year. For example if business planned to spend �5000 on expenditure but they actually spent �6000. ...read more.

Conclusion

So, they don't have to hire more staff. Also other costs figures were higher than budget in April, this shows that they spend extra money in their other costs that they expected to by �2.000. The budget for Gardiner Stores plc can be brought back into line so long as the budget creators have accurate data at their disposal and the business acts from their last budget accordingly. This is done by attempting to reduce the businesses costs and increase sales revenue levels, as this will show that the business is intending to make profits. Conclusion In this task, I have mentioned why costs and budgets need to be controlled and the importance of controlling the budget and costs in the business. I have also mentioned the advantages and disadvantages of producing a good controlled and monitored budget and what can happen to a business if costs and budgets are not monitored. I have also mentioned the over expenditure that why business have to pay more then their estimates. At the end I have also talk about how to monitor budget. ?? ?? ?? ?? Shahzaib Amjad Unit 2 - Merit 2 ...read more.

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Too much is expected of budgeting in this essay. Businesses use them as guides to help plan and they analyse the variances (where the budget is wrong) to ensure that nothing too untoward is happening and see if corrective action is required. This aspect of budgeting has I feel been overlooked

Marked by teacher David Salter 07/02/2012

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