Its important for budgets to be controlled against the actual costs so the company doesn’t make any losses. Before a company starts up they have a budget and set targets now in any companies things are bound to go wrong so the best thing to do is to always keep an eye out to make sure things are always in check and this is done by always checking the actual costs this is to make sure that if the business is going over the budget it can be resolved very quickly.

The department manager is the main person who checks the budget as they are the one that have the budget given directly to them, now this will vary in different business but most department managers will check the budget as many times as once every fortnight with some others choosing to check it as often as once every week, in most cases the companies that cant afford to be going over the budget at all will have the most budget checks just to keep a certainty that things are in working order.

One way to make sure that the business doesn’t over spend and in actual fact make enough to make sure they stay in business is to use a technique that is used to calculate the fixed costs, variable costs and sales to work out the point in which their costs equal their sales (break-even point).

Break-even point is a very good way to make sure that the business is in control of the outcome as it gives the companies a rough idea of what they should be making and how often they should spend, so basically if a business is confident that they are going to meet the costs they have they can afford to take a few risks such as increasing a few prices especially if they have very low costs to pay which would result in high profits however companies that have high costs and are not quite sure that they can generate enough income to keep in touch with the costs they have fixed/variable would use the break-even point chart to analyse what they should be spending and making it a high priority to keep within the budget.

For a company that is struggling to meet the budget a number of options must be taken so that they meet it, a mobile phone company for example rely on sales to meet the budget! The thing about a sales company is sometimes it varys on what kind of season it is for successful sales, one month could be good and another month could be bad. For the bad months things have to change so a sudden twist of prices would be seen as they would shoot high to cover some of the losses, you will find for example a mobile phone that would normally costs i?? 40 would costs i??

80 now this really is done to cover for the phones they are meant to sell so if they have to sell 10 of the 40 mobile phones in a month and things are not looking too good the reason for the price jump would ensure that in that month they have to try and sell 5 mobile phones to hit their target now this all depends on how good the sales staff are at pushing the sales but this would normally go in the hands of the store managers who have more experience to try push the sales. Another way a business could try to increase the income to meet the budget is by keeping the profits made so that they can be used when times get difficult so for an example if a company exceeds its targets the best thing for them to do is to keep the profits always keeping in mind for when the market might fall or when sales generally don’t go too well.

A lot of problems may arise if budgets are not controlled and monitored such as loss of staff, this can be done to balance things out, another thing that can be done is the staff could stop valuing valuable items and an increase off waste would occur which would result in heavy losses for the company, Prices would have to be increased so the damaged goods are essentially covered for in the sales but this could also result in a loss of customers due to prices they are not too happy with. In other cases if the budget is not monitored it could result in the company ultimately closing down as they cant keep up with the costs (fixed/variable) or they can end up getting bought out by a different company.