The Principle of Costing and Business Control System

Added on -2020-02-17

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Managing finance resources1
Table of ContentsIntroduction.................................................................................................................................................3Task 1..........................................................................................................................................................41.1A clear outline explanation of the principle of costing and business control system..........................41.2Information needed to successfully manage the business operation...................................................71.3 The explanation of regulatory requirement for managing financial resources...................................81.4An evaluation of computer software as a mean of managing the financial resources.........................9Task 2........................................................................................................................................................102.1discuss the various sources of the income that might be for her new care home...............................102.2 factors which may affect the availability of the finance...................................................................112.3 Review the various kind of budget expenditure in health and social care organization...................122.4 evaluate how the decision about the expenditure are to be made in the resident care home............14Task 3........................................................................................................................................................163.2 What can she do if she suspects frauds in the cash budget?.............................................................193.3 Suggest and evaluate methods used to monitor and control budgets?..............................................20Task 4........................................................................................................................................................224.1 The information needed by the manager to make decision about the level of service which will be provided to the users and the funding organization...............................................................................224.2analyze the relationship between the level of service she will offer and the expenditure..................234.3 evaluate how financial consideration will have an effect on the individual.....................................234.4 Suggest financial system that can improve the service which the new health care is offering.........24Conclusion.................................................................................................................................................25References.................................................................................................................................................262
IntroductionThe success of the business largely depends upon how effectively the manager utilize variousresources to run business operation. The management needs to make decision how it uses itsfinancial resources and monitor its budget to manage business operation. The management needsto effectively manage its finance to attain the goals and objective of the business. Themanagement used various type of budget to check that the financial resources of the company areproperly utilized and there is no wastage of resources.3
Task 11.1A clear outline explanation of the principle of costing and business control system.The costing is the process to estimate the cost of the production or running business by makingproper allocation to expenditure to different stages of the production. The costing helps themanagement to effectively manage its financial resources to conduct business operationeffectively. The costing is the technique used by the management to compute the total cost perunit by considering various fixed and variable cost used in producing goods and service. Themain principle of costing is as follows-To effectively manage the business the management needs to effectively manage all the costwhich is incurred to produce the good. The costing helps in proper allocation of various cost onthe different unit or function of the business. The key principle of costing are as follows-Cost and cause relationship- The management needs to check that the cost which is incurredwhile conducting the operations are properly allocated to the unit or product to make effectivedecision in relation to the business. The management needs to collect the various cost as per thenature and allocate and apportion those cost on the basis of cost relationship. The cost needs tobe charged only to those unit for which such cost has been incurred.Cost is charged after it is incurred- The management needs to check that the cost is chargedonly after they are incurred. The cost should include only those expenditure which has beenactually incurred and doesn’t include cost which are likely to arise in future.Future cost doesn’t include the cost which is incurred in past-The costing ensures that thecost which is incurred in the particular period should be meet by the profit of that particularperiod only. The cost of the past year are included in the current period than it will provideinappropriate result to the management because it creates inappropriate burden on the particularyear (Martinez, Kromann, & Astrup, 2015).Maintain cost record as per double entry system- The organization generally keeps the4
accounts for the cost as per double entry system to effectively manage business operation. Thecosting uses the various cost sheet and the cost statement for the purpose of ascertaining cost andprovides cost control guidelines to the management.Treatment of abnormal cost-The management also needs to check that the abnormal cost arenot charged to the production unit as the cost has no relation with the production part. It willmislead the management in making various pricing or other decision of the business. Thecosting helps in ensuring that the abnormal cost are charged to cost center and not to any of theproduction unit. Also the other expenses which doesn’t have any relationship to the operation arenot charge to the costing (Reineking, Chamberlain, Rudolph & Smith, 2013).The various business control system use by the manager in the process are procurement processand business control system.Procurement process – the procurement process requires the series of steps such as finding,acquiring and purchasing the resources which are required to manufacture goods and service.The procurement process is too dynamic that it requires constant analyze and monitoring all theactivity within the organization. The home care can follow the series of the steps to effectivelyacquire the resources while conducting their activity. To effectively manage the procurementprocess the manger needs to follow the series of steps which start from need recognition andinvolves sources, price, expenditure, and invoice and maintain the records. The new care homewill follow the following steps for procurement process.The manager of the new home care will plan the procurement based on the identifiedneed.The manager than needs to decide the scope of procurement process. She needs to decidethat the goods and service which are required by the business are subject to coordinatedprocurement that must be used.The manager of the new home care than needs to decide the method which is to be usedfor the procurement of the resources.After that manager need to approach the market and identify the sources from which thefund are to be acquired.The manager than needs to evaluate the submission and conclude the tender process.5
The final step is to manage the process to check that the process is conducted in theplaned way.Management control system – The management control system gathers the information toevaluate the performance of the various unit of the business. It is the tool to measure howeffectively the business is conducting its operation to attain the objective and goals of thebusiness. The management control system involves the set of the activity or decision which aretaken by the manager to establish purpose, allocate resources and achieve organization purpose.The management control system unites the different parts of the organization so that each unitperform their work effectively which help in fulfilling overall purpose of the organization. Themanager of new home care needs to follow the following steps to manage the business.Programing- The manager of the new home care needs to choose the specific program for theorganization activity which describes the activity to be conducted within the framework ofimplementation strategy of the organization.Budget- The manager needs to prepare the budget in which he will determine the resourceswhich is to be charged to each activity of the business. The manager will prepare the budget forthe area of his operation to effectively conduct the business process.Management of the process- The manager need to check that the operation of the business isconducted in the planned way and within the allocated budget.Reporting and analyze- The reporting and analyzing is used by the manager of the new homecare as a means of controlling the set plan and comparing the actual result from those which wasset in the plan.The cost which the care home incurs per month on one resident is as follows –No of resident = 656

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