Unit 2 M4
Introduction
In this task, i will discuss the different ways of how costs and budgets can be controlled at
British Airways and the advantages and disadvantages of controlling costs and budgets.
The important responsibilities are to be able to control budgets and costs and also make sure
that they are making a positive financial input to the business. British Airways have costs in
which different varieties of finance are used to cover different types of business costs. It is very
important for British Airways to control its costs so that it can manage its financial resources
effectively. The reason British Airways need to control their costs properly would be that it would
end up saving money on expenses and increase its revenue. This will help them to increase its
revenues and this would allow British Airways to invest more money if required. For example,
British Airways should control its costs so that it saves money and by having the right amount of
stock, they can then have the full benefits of selling those stocks and receiving cash which could
be used for other areas of the business. British Airways should also control costs if they want to
earn more money, since the whole world is in recession now if they control costs now then they
can be in secure place. If still the recession continues they maybe in a problem just like any
other organisation would, therefore they should save money in banks and money will be
circulated so they can contribute to the country's economy. If British Airways don’t monitor and
don’t control their budget, costs on, then they could hit the roof and wash away the profits and
affect them to have fewer for their workers. A business has to budget and control the spending
in order to know what has been received and spent, otherwise uncontrolled spending could and
deterioration could happen. One of the problems that could occur if costs are not controlled to
budget is: high fixed cost per item which reduced the business profit and the ability to compete.
Below I have created a breakeven chart showing how costs and revenues of a business change
with a change in sales based on British Airways figures.
In order to control their budgeting British Airways would have to examine their variances. The
variance shows the difference between the budget and what’s actually spent and also whether
the organisation is making profit or loss. As shown in the Breakeven table, it shows that British
Airways sell 1 ticket for 1,500. However the actual figure that they receive is 1,450 which implies
that they are not making a profit and therefore are making a financial loss of £50 per ticket.
Therefore, when actual revenues fall short of budgeted amounts, the variance is unfavorable.
If British Airways do not control their budgets then they would be over spending therefore the
organisation could turn into a major downfall and therefore may run out of business. As people
prefer buying things on sale, discounts serve as a ploy to attract more people to British Airways.
If British Airways discount is only good for a certain amount of days, then they should mention
that when they advertise the discounted offers. More people are likely gather information on
offers and sales at British Airways, if they know they only have a few days to do so. In contrary,
British Airways need to use diverse strategies such as finding different suppliers of stock and
gas, water and electric.
Introduction
In this task, i will discuss the different ways of how costs and budgets can be controlled at
British Airways and the advantages and disadvantages of controlling costs and budgets.
The important responsibilities are to be able to control budgets and costs and also make sure
that they are making a positive financial input to the business. British Airways have costs in
which different varieties of finance are used to cover different types of business costs. It is very
important for British Airways to control its costs so that it can manage its financial resources
effectively. The reason British Airways need to control their costs properly would be that it would
end up saving money on expenses and increase its revenue. This will help them to increase its
revenues and this would allow British Airways to invest more money if required. For example,
British Airways should control its costs so that it saves money and by having the right amount of
stock, they can then have the full benefits of selling those stocks and receiving cash which could
be used for other areas of the business. British Airways should also control costs if they want to
earn more money, since the whole world is in recession now if they control costs now then they
can be in secure place. If still the recession continues they maybe in a problem just like any
other organisation would, therefore they should save money in banks and money will be
circulated so they can contribute to the country's economy. If British Airways don’t monitor and
don’t control their budget, costs on, then they could hit the roof and wash away the profits and
affect them to have fewer for their workers. A business has to budget and control the spending
in order to know what has been received and spent, otherwise uncontrolled spending could and
deterioration could happen. One of the problems that could occur if costs are not controlled to
budget is: high fixed cost per item which reduced the business profit and the ability to compete.
Below I have created a breakeven chart showing how costs and revenues of a business change
with a change in sales based on British Airways figures.
In order to control their budgeting British Airways would have to examine their variances. The
variance shows the difference between the budget and what’s actually spent and also whether
the organisation is making profit or loss. As shown in the Breakeven table, it shows that British
Airways sell 1 ticket for 1,500. However the actual figure that they receive is 1,450 which implies
that they are not making a profit and therefore are making a financial loss of £50 per ticket.
Therefore, when actual revenues fall short of budgeted amounts, the variance is unfavorable.
If British Airways do not control their budgets then they would be over spending therefore the
organisation could turn into a major downfall and therefore may run out of business. As people
prefer buying things on sale, discounts serve as a ploy to attract more people to British Airways.
If British Airways discount is only good for a certain amount of days, then they should mention
that when they advertise the discounted offers. More people are likely gather information on
offers and sales at British Airways, if they know they only have a few days to do so. In contrary,
British Airways need to use diverse strategies such as finding different suppliers of stock and
gas, water and electric.
