P1 describe the recruitment documentation used in a selected organisation P2 describe the main employability, personal and communication skills required when applying for a specific job role P3 describe the main physical and technological resources required in the operation of a selected organisati...
BTEC Business Level 3 – Unit 2 Investigating Business Resources
In-class controlled assessment
Budget Actual Variances
Revenue 150,000 165,000 15,000 (F)
Material 30,000 41,000 11,000 (A)
Labour 60,000 70,000 10,000 (A)
Overheads 40,000 48,000 8,000 (A)
Profit/Loss 20,000 6,000 14,000 (A)
1. What is the purpose of the budget? Also, explain the contents of a budget with examples for
his business. Include the purpose of variance analysis.
The budget is a financial target for the cost and the revenues that are going to happen in the
future, the budget is set because the business would like to make sure that they are going to
have enough money for all the expenses that they will need to pay around the year or for a
certain work so it is important that the budget will be set out before the owner or the business
starts to spending, the budget will monitor the performance of the business and the profit and
loss that they will have. For an example the budget will help him to see how much were the cost
and how much did he get paid for the work (the revenue) and this means the he will be able to
make sure that he is going to have a profit instead of a loss. The variance analysis allows him to
see the difference between how much was the budget and how much did he actually spent or
earned so that he could see how much was the profit and how much was the loss if he had.
2. How can he use budget to help him with financial control for his business? You should
include consideration of liquidity and reserves.
He can use the budget to help with his financial control for his business by having a budget of
the revenue that he is going to earn and the cost that he is going to have so that he is going to
be able to see a clear difference between how much he is going to earn and the costs that he is
going to have so that he will be able to see a clear difference if it is going to be an adverse or a
favourable, this means if it will be an adverse it would be more than his budget however if it will
be a favourable that it means that he is going to have profit, moreover this means that if he is
going to have more cost than the actual profit he would be able to decide which type of
material he is going to use. The reserves would be the money that he is going to have available
for the cost that he is going to have, the reserves would be the amount of money that he could
be needed in an emergency to pay the costs however, the liquidity is the profit that the
organisation he is going to have.
3. Calculate the variance for the above table and state whether they are adverse or favourable.
Calculate the profit/loss and the profit/loss variances.
4. Identify factors that may have caused the variances (why the business may have overspent)
and suggest possible remedies.
The business could have overspent, the business could have lack of planning this means that
could not be organised as they should be not have a plan for the success of their organisation
and this means that they could have a lack of training of the employees. For this they could start
to do the training of the employee and make some specific planning for the organisation and
that could help them to be prepared for loss or profit. The organisation is not having a finance
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