Reference no: EM133922165

Problem

Two areas that are more than 10% off budget are Direct Labor Cost and Advertising/Marketing. Direct Labor Cost Labor is higher than expected, which might be from extra overtime, hiring more staff, or pay raises. If sales were up, this wouldn't be as concerning, but revenues are actually under budget. That means costs are climbing without the income to balance it. This also connects to general and administrative expenses, which are also over budget and could be partly from more staff or higher wages. Action: Review staffing and overtime use to see where hours can be cut back without hurting production. Advertising/Marketing We've spent a lot less than planned on marketing. That saves money, but it could also be part of why revenues are down, less advertising usually means fewer leads and sales. This might be linked to product development, which is also under budget, meaning fewer new products to promote. Action: Use some of the saved marketing money for targeted campaigns over the next six months, especially for products with higher profit margins. We need to control labor costs and make sure marketing is strong enough to help close the revenue gap before year-end. Assess the areas they have noted. Get the instant assignment help. Explain why these accounts could be over or under budget.