Jahed Ahmed
BMC000010360
M4 – Analyse the reasons why costs need to be controlled to
budget.
The reasons that have led Andrew’s Café to over-expenditure
could be that there is an increase in fixed costs therefore there
is an increase in total costs. He also could have spent some of
his money on new technology such as updating his software so
he keeps up to date with technology. He could have spent his
money on events such as charity events to help raise the
publicity level of his new café. He could have spent his money
on promoting his new café by re-branding his products so it
brings an increase in customers. He could have decided to
install wi-fi which would attract more business type of people
to his café so they could browse the internet and do their work
at the café if they need to. He could make a few adjustments
to his opening times such as he could open early so it attracts
people to have their breakfast at the café, all this would be
attracting his target audience.
Employing staff such as cleaners or cashiers would make
Andrew spend more money because he would have to pay
their wages whereas if he ran the café himself he wouldn’t
have had to pay anyone any wages and he could keep the
profits himself. If Andrew had paid for training such as accounts
training then that could have also helped to lead to over-
expenditure. Andrew could have installed CCTV cameras
around his café where the money for it would have come out of
his budget which could have also led to over-expenditure.
He would have to spend money in order to help his business to
survive such as by paying for his utility bills such as gas,
electric and water bills. The VAT has risen to 20% which means
that the total costs are higher therefore more money would
have to come out of his budget.
All of the above are reasons and summaries which could have
led Andrew’s Café to over-expenditure.
If costs and budgets are not monitored then Andrew’s Café’
profits would be adversely affected; he could even be making a
loss rather than a profit, which leaves him with less money so
he can’t pay for other equipment or pay his staff their wages.
He needs to use his budgeting to control his costs. His budget
BMC000010360
M4 – Analyse the reasons why costs need to be controlled to
budget.
The reasons that have led Andrew’s Café to over-expenditure
could be that there is an increase in fixed costs therefore there
is an increase in total costs. He also could have spent some of
his money on new technology such as updating his software so
he keeps up to date with technology. He could have spent his
money on events such as charity events to help raise the
publicity level of his new café. He could have spent his money
on promoting his new café by re-branding his products so it
brings an increase in customers. He could have decided to
install wi-fi which would attract more business type of people
to his café so they could browse the internet and do their work
at the café if they need to. He could make a few adjustments
to his opening times such as he could open early so it attracts
people to have their breakfast at the café, all this would be
attracting his target audience.
Employing staff such as cleaners or cashiers would make
Andrew spend more money because he would have to pay
their wages whereas if he ran the café himself he wouldn’t
have had to pay anyone any wages and he could keep the
profits himself. If Andrew had paid for training such as accounts
training then that could have also helped to lead to over-
expenditure. Andrew could have installed CCTV cameras
around his café where the money for it would have come out of
his budget which could have also led to over-expenditure.
He would have to spend money in order to help his business to
survive such as by paying for his utility bills such as gas,
electric and water bills. The VAT has risen to 20% which means
that the total costs are higher therefore more money would
have to come out of his budget.
All of the above are reasons and summaries which could have
led Andrew’s Café to over-expenditure.
If costs and budgets are not monitored then Andrew’s Café’
profits would be adversely affected; he could even be making a
loss rather than a profit, which leaves him with less money so
he can’t pay for other equipment or pay his staff their wages.
He needs to use his budgeting to control his costs. His budget
