• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Investigating Business Resources Unit 2

Extracts from this document...

Introduction

Investigating Business Resources Unit 2 Costs and Budgets (M2) Profit is the difference between the selling price and the production cost. Product costs include not only the cost of manufacturing a product, but also all the other costs incurred in the process of producing or delivering a product or service. A business reaches the break-even point when its total revenue equal the total costs. Break-even graphs are used to illustrate the total costs and the total revenue. Businesses will use break-even analysis to calculate the level of sales that are needed to break even. A business can use this information to work out the impact of a change in price or the level of sales needed to cover a new bank loan. Break-even analyses are important for any business as they will be able to use break even graphs to work out the margin of safety. This is the amount by which demand can fall before the business starts to make a loss instead of a profit. Business Costs Fixed costs do increase or decrease. This means that if the business makes better use of their facilities and either produce more products or provide more services then the importance of these fixed costs will be reduced. Although, fixed costs do not change, they do over a period of time. ...read more.

Middle

There are a number of ways to reduce the operating costs of a business these include staff wages, property rental, cheaper suppliers and less usage. The importance of profit to a business is to pay its owner/s wage. Profits can also be kept in the bank to use as reserves for a later time or in case of emergencies. Profits can also be used to expand the business. They can update or upgrade equipment to improve efficiency or repay any debts. Budget For any company to succeed, needs to have control on the income and expenditure in order to control costs. An example of this is a budget. A budget is a forecast of costs and incomes. The costs and incomes must relate to a particular purpose. Budgets may usually refer to an ongoing project, but it may equally be important when considering capital expenditure. Individual Budgets can be based on a variety of different elements. Individual budgets are brought together into a master budget - this is the budget for the organisation as a whole. If we look at an example of a project that did not have any budgetary controls we may see how a business can fail. A company may have a great demand for its goods and need to increase capacity. ...read more.

Conclusion

The break-even point in the graph is the point where the total cost line and the total revenue line intersect. This can predicted the amount of units needed to sell to break-even and the amount of sales revenue; this can also predict the profit margins. A break-even formula can also predict the break-even point; the number of sales required to break-even can be calculated by dividing the fixed costs by the variable costs minus the selling price. A business can check its profitable activity level by using a break-even formula as they can predicted how many units it needs to sell to break-even. It can also help owners answer key questions and help business make decisions. For example, if a business wants to expand using the break-even formula it can help the owner decide whether they can afford it and how long it will take till the business see a return in their investment. This is an example of a break even chart and the way it should look. As you can see the lines 0A represent the variation of income of different levels of production activity. The lines OB represent the fixed costs in the business. As the output increases, the variable costs are incurred, this means that the total costs also increase. ?? ?? ?? ?? Anton Prinson Sritharan BTEC BUSINESS NATIONAL UNIT 2 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Marketing & Research essays

  1. BTEC BUSINESS UNIT 2

    It has been known that businesses grow so much that staff feel that they are just a small cog in a big machine; this may lead to carelessness and lack of responsibilities. Many companies grow very quickly. Some government statistics show the world's fastest growing companies in a time span of 10 years.

  2. Marketing Plan

    1.4 Product Offering Pampers brand disposable diapers offered on the shelves in the market today are as such: * Pampers CottonCare for newborns Cotton like quilted sheets with excellent breathability is used to help keep newborn's skin smooth and comfortable.

  1. Business Studies Company Profile

    testing a car out may lead the customer to liking the car and thus buying it. Sales promotion is very good for immediately boosting sales. * Personal selling, this is where someone from BMW will talk to you person to person and try to sell you the product, for example,

  2. Marketing Research

    SNOWBALL SAMPLING : THIS TECHNIQUE IS USED WHEN THE POPULATION BEING SOUGHT IS A SMALL ONE AND CHANCES OF FINDING THEM BY TRADITIONAL METHODS ARE LOW. FOR E.G , TO FIND OWNERS OF MERCEDES BENZ CARS IN A CITY , WE MAY GO TO ONE OR TWO , AND ASK THEM IF THEY KNOW ANYONE ELSE WHO OWNS MERCEDES.

  1. unit 2 recruitment in the work place

    However if the employee gets promoted their will be a gap in the previous employees position so this will need to be filled by recruiting a new member of staff. After when a suitable reason is notified by the business, the business will start carrying out their processes of employing a new worker.

  2. BTEC national Business UNIT 2 P1

    Previous job history will be required along with references. General skills could also be stated, things like if you have a drivers licence or ICT skills. Advertise the Job Advertising of the job can be done in many ways; Internet, Job seekers, Window shops, Newspapers.

  1. Mcdonalds. For this unit I will need to produce a portfolio of work investigating ...

    They pursue this aim by keeping certain objectives. The first major objective of every business is to increase their sales. Each and every business is competing to make more profit then they were making in the first few months of opening their business.

  2. Research into Business Plans

    All together the business plan would help them initiate who and how the objectives will be achieved and completed by. It is important to have goals in a business because it helps run the business and also helps set it up for times when they lose track of their activity.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work