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An interviewer asked this Q to me. I answered that, may be proper budgeting is not happening there. Then he agreed, again he asked if the Budgeting also good , then what may be the reason? Pls answer.if you know..i want to knw it
I am sorry I can't speak english good
It is always cost,Revenue,profit.
Also we must study profit chart,are they really making profits,high revenue doesn't mean profits.
We must study the whole process to determine the cause.
If revenue is increasing and cost are also increasing then we will not make profits.
This is a general question that needs more inputs and information.
If the elastic product (price increase effect on sales significantly)...
In this case, The first step is to an Eliminate the Non added value cost after we found it directly, then check the Uncontrollable cost (if exists)and discussed with the person concerned in order to remove it.
Finally, if the lose still, we have to check the fixed cost and see how could we cover it by implementing the variable cost approach.
If sales are increasing along side cost, they will obviously not make profits. Thier expenditures should be rechecked
The made budgeting but they didn't control certain expenses during fiscal year this could be one of the reason that they are looding.
i think there are some problems such as :
profit margins are not right .
may be there are an exceeded numbers of employers.
may be there are big qty of goods that were spoiled every year.
It depends on Indirect cost and direct cost.
Sales = Margin + cost
so if sales is high and we are lossing money that means cost is also high
unefficient costing system which leads to wrong pricing
It may be because of the following reasons.
1.overtreading
2.high overhead expences
3.Poor pricing strategy
It may happened because of the following reasons.
a. Overhead Expenses is too high
b. Pricing policies
c. Improper Inventory management.
d. High selling cost.
.
