To: Clair Catherall
From: Mohammed Uzair
Date: 29/09/15
There are many reasons why the costs of the business should be controlled in order to
budget, failing to control the budgets would lead to problems that could arise at the Curry
Lounge.
1) To ensure more money is coming in than going out
It is vital that Curry Lounge ensure that more money is coming in than going out because if
the business had more money going out than coming in then it would have a negative
balance on its bank account which may lead to the business making a loss instead of a profit.
An example of more money going out than coming in can be seen when the Curry Lounge
had a budget of £2500 that they had forecasted to make from food sales in June but ended
up making only £1500, in the same month they ended up making a loss of £1000. Thus more
money was going out as no money had been made in that month instead it had been a loss.
Another case where the business had more money going out than coming in is in the next
month of July when the restaurant had budgeted to make £3200 from food sale but only
made £2100, in the same month the business ended up making a loss of £400 thus making
no money meaning more money was going out and nothing was coming in. If the business
forecasts to make a higher sale figure; it will ensure it has extra materials and produce but if
it doesn’t make those sale then the materials and produce will be wasted thus making the
business loss money instead of making it. The restaurant also incorrectly forecasted the
budgets that it hoped it was going to spend on the materials/produce because in June it had
budgeted that £650 would be spent on material however, it spent £800 and then went on to
make a loss of £1000 thus meaning the costs of the materials were not covered, this carried
on in the following month of July when it forecasted spending £850 but spent £1000 on the
materials, in the same month they ended up making a loss of £400. It is important to control
the costs because if it does not then it will lead to the restaurant making a loss and make be
the means of it having to close down. One way the restaurant could prevent such
occurrences by reducing expenditure like the salaries of workers, if they failed to do this
then they will soon have no choice but to close as they won’t have money left seeing that
more money is going out than coming in. It is also very important to stick to the budget
because if the restaurant ends up spending over the assigned budget then it will have a lot
problems; both short and long term. One such problem they will face is that more money
going out of the business than coming which could even result in the business making a loss
as seen in the Curry Lounge’s budgets. If they were to carry on making such a loss then the
business will find it hard to stay open because they will find it hard to pay off their expenses
and debts to suppliers. This will have a knock off effect and in turn the business will have
stop trading and close the business. Another way that the Curry Lounge could look for
cheaper suppliers for their materials or produce which again will reduce their cost or they
could buy less materials and buy more when they need them instead of buying a lot at the
From: Mohammed Uzair
Date: 29/09/15
There are many reasons why the costs of the business should be controlled in order to
budget, failing to control the budgets would lead to problems that could arise at the Curry
Lounge.
1) To ensure more money is coming in than going out
It is vital that Curry Lounge ensure that more money is coming in than going out because if
the business had more money going out than coming in then it would have a negative
balance on its bank account which may lead to the business making a loss instead of a profit.
An example of more money going out than coming in can be seen when the Curry Lounge
had a budget of £2500 that they had forecasted to make from food sales in June but ended
up making only £1500, in the same month they ended up making a loss of £1000. Thus more
money was going out as no money had been made in that month instead it had been a loss.
Another case where the business had more money going out than coming in is in the next
month of July when the restaurant had budgeted to make £3200 from food sale but only
made £2100, in the same month the business ended up making a loss of £400 thus making
no money meaning more money was going out and nothing was coming in. If the business
forecasts to make a higher sale figure; it will ensure it has extra materials and produce but if
it doesn’t make those sale then the materials and produce will be wasted thus making the
business loss money instead of making it. The restaurant also incorrectly forecasted the
budgets that it hoped it was going to spend on the materials/produce because in June it had
budgeted that £650 would be spent on material however, it spent £800 and then went on to
make a loss of £1000 thus meaning the costs of the materials were not covered, this carried
on in the following month of July when it forecasted spending £850 but spent £1000 on the
materials, in the same month they ended up making a loss of £400. It is important to control
the costs because if it does not then it will lead to the restaurant making a loss and make be
the means of it having to close down. One way the restaurant could prevent such
occurrences by reducing expenditure like the salaries of workers, if they failed to do this
then they will soon have no choice but to close as they won’t have money left seeing that
more money is going out than coming in. It is also very important to stick to the budget
because if the restaurant ends up spending over the assigned budget then it will have a lot
problems; both short and long term. One such problem they will face is that more money
going out of the business than coming which could even result in the business making a loss
as seen in the Curry Lounge’s budgets. If they were to carry on making such a loss then the
business will find it hard to stay open because they will find it hard to pay off their expenses
and debts to suppliers. This will have a knock off effect and in turn the business will have
stop trading and close the business. Another way that the Curry Lounge could look for
cheaper suppliers for their materials or produce which again will reduce their cost or they
could buy less materials and buy more when they need them instead of buying a lot at the
