Managing resources
Resources are assets, both tangible and intangibles that a business organization employs in its production process to create wealth. It can also be said that resources are basic fundamentals that accompany uses in its operations to earn revenue/income. More formally people and things may be referred to as resources. An organization takes inputs of resources and converts them into outputs. In a manufacturing organization resources like: mental, plastics, machinery and equipment, skills of people and money to pay for the raw materials, machinery and people may be encountered. Resources are conventionally referred to as materials, machinery, human capital and capital (money), time and perhaps space or land where land and buildings stand. Resources are therefore: physical, financial, information and human.
Physical resources are represented by tangibles for example machinery and equipments; financial resources represent capital intensive (money that follows our ideas, success and productivity; information which is used to manage other resources because you might have to pay for it (buying a mailing list) you might have to pay for it (buying a mailing list) you may process it (analyze the mailing list to find all customers and it can be sold as an output (newspaper, book or a set of accounts produced by accountants which can be sued to make informed decisions. Human resources who involve providing labor or energy in the production process involves providing knowledge and skills in production so as to produce outputs.
Managing the resources well ahs been a biggest challenge to organization in their quest for a bigger wealth. Organization’s aims at minimizing costs and wastes while maximizing wealth. This can be brought out only by so und management policies to cater for the surging costs organization through employing the right people (human capital) with competent skills and expertise knowledge in various fields eliminates the issues of duplication and redundancies and therefore the organization is able to improve the efficiencies in its operations. Also organizations provide their employees with vigorous training which updates their minds in their areas of work to cater for changes in theory and in practice.
Also organization manages resources well by budgeting properly and allocations as budgeting in organization acts as a standard of performance against which actual performance can be measured, budgets also creates costs consciousness and introduces an attitude of mind in which the inefficiency and wastes cannot derive; budgeting also remove of idle capacity of machinery and labor capital thereby a proper and full utilization of resources well. Sales variance as depicted in the question arises or is caused by selling the unit at different price from the set price. This is the difference in the standard selling price and the actual selling price for the actual quantity. From what we see in the sales budget and variance actual cumulative and cumulative budget could have been avoided to give a positive variance which will give a considerable improvement in resource utilization. Instead actual monthly performance could have been used with the monthly budget as this gives a positive variance as the volume of sales progresses from one month to the other. Negative variance indicates perhaps an upsurge of prices of raw materials, interest rates for the start-up capital, idle capacity in the usage of plant and machinery which increases the amount of depreciation hence wear and tear allowance being high.
References
Financial Analysis by McGraw Hill 2003
