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Unit 2 - P6 Business level 3
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This work is p6 for unit 2 business btec level 3 Requires you to illustrate the use of budgets as a means of exercising financial control of a selected company.
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Gustavo Prado P6-Illustrate the use of budgets as a means of exercising financial control of a selected
company.
For this task I am going to illustrate and be as clear as possible about the use of budget
exercising the financial control. I will explain the break even process and also go into what the
budget strategy is.
Break Even:
Break-even can be found on graphs that businesses makes to know about their
financial statements, to know how well or bad they are doing. Different costs and
sale prices information are also found in the break-even. Tesco makes sure that
they make enough sales to prevent loss.
To figure out the point at which their costs are equal their sales, they can use
calculations that they made of the fixed costs, variable costs and sales. It is also
good because it shows how many items Tesco needs to sell.
If Tesco sells 300 products; I change the amount for 500 and multiply it by the
price of the product which is £1.20. The break-even clearly will drop down a lot.
However if the business increases price of the same product instead of
increasing the amount, then the business will have to struggle to sell a lot,
otherwise they will lose money.
This way the business won’t be making profit and this is a worry.
If they change the “fixed cost’’ from 10 to 4000 while not changing the rest, the
breakeven will increase which means that the business will have more profit. The
business will need to sell many products because the fixed cost is increased.
If I change the variable cost from 200 to 250, it would increase the break even
unit. The break even became 26.67 as I increased the variable cost. This shows
that the demand is low so the break-even is higher.
Budget:
Budget is like a strategy which supports the idea of estimating how much the
business makes in sales and how much they are going to pay in costs and show
profit or loss. Tesco has to make sure they use the strategy so they are aware of
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