Essay about btec business level 3 unit 2 d3

687 WordsMar 24, 20143 Pages
“D3: Evaluate the problems they have identified from unmonitored costs and budgets” Introduction: For this task I will be discussing the effects of un-monitoring cost and budgets, and seeing how business could suffer if they are not look after responsibly. I will show disadvantages of not using this method properly. A cost of goods is what it should spend to make products. At the start of each period budget of production will be ready, using cost of goods and predicted production quantities. At the end of each period a variance report is prepared to compare the budget costs with the actual costs. The variance report can tell how well Gardiner Store PLC did at carrying out their budget aims. A favorable variance shows that actual costs…show more content…
They will have to make people redundant: People redundant can help the business to cut costs, but there will be not enough staff to work in the supermarket, which some service can’t be carried out to customers. But because firing some staffs can help cut a lot, so they may need to take action. Other competitors will sell more products: Because the supermarket of Gardiner Stores PLC doesn't have that much money for input because they need to cut costs to cover the loss of profit on April, also they make people redundant (explained above), so their competitors will take advantages on them, so therefore they will sell more product. Changes in costs Variances can arise for a large number of reasons: Errors in estimating Poor management of resources Unforeseen price changes Equipment breakdown Labor problems Poor planning Shortage of raw materials Budgeting and Variance accounting presume that managers should fix problems, not bury or hide them. It also presumes that these problems are short-term problems, and can be effectively controlled in the future. Sometimes there is a change in actual costs that necessitates a change in standard costs. For instance, a new labor contract could increase total labor costs by a predictable amount. Standard labor costs should be re-calculated to reflect the new actual
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