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Compares historical figure budgets with zero-based budgeting, and outlines how variances support evaluation of outcomes against plans.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/template/","Template",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/template/presentations/","Presentations",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/template/hl-ib-business-management-39-budgets-revision-notes-cost-profit-centres-budgets-variances/254167/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/hl-ib-business-management-39-budgets-revision-notes-cost-profit-centres-budgets-variances/254167.png","ImageObject",442,249,{"name":42,"@type":43},"wps_ap_test_251126_0180","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-10-27","2026-09-13",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",13,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What is the difference between a cost centre and a profit centre?","Question",{"text":63,"@type":64},"A cost centre is responsible for incurring costs without generating revenue, while a profit centre generates revenue and incurs costs. Profit centres are expected to cover costs and make a profit, with managers accountable for overall financial performance.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"Why do businesses use budgets?",{"text":68,"@type":64},"Businesses use budgets for planning and monitoring, control, coordination and communication, and motivation and efficiency. Regular monitoring helps managers manage functional areas and support objective setting and review.",{"name":70,"@type":61,"acceptedAnswer":71},"How do historical figure budgeting and zero-based budgeting differ?",{"text":72,"@type":64},"Historical figure budgets rely on prior sales and costs data and are influenced by external factors. Zero-based budgeting allocates no budget initially, so all spending must be justified, making it more time-consuming and evidence-based.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},254167,1791729475,{"code":4,"msg":82,"data":83},"success",[84,88,93,98,103,108,113,118,123],{"id":85,"doc_module":22,"doc_module_name":25,"category_name":29,"show_sort_weight":86,"slug":87},11,90,"presentations",{"id":89,"doc_module":22,"doc_module_name":25,"category_name":90,"show_sort_weight":91,"slug":92},12,"Resumes",80,"resumes",{"id":94,"doc_module":22,"doc_module_name":25,"category_name":95,"show_sort_weight":96,"slug":97},14,"Invoices",70,"invoices",{"id":99,"doc_module":22,"doc_module_name":25,"category_name":100,"show_sort_weight":101,"slug":102},15,"Posters",60,"posters",{"id":104,"doc_module":22,"doc_module_name":25,"category_name":105,"show_sort_weight":106,"slug":107},16,"Social 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Questions, Past Papers  \nYour notes  \nHead to www.savemyexams. com for more awesome resources  \nCost & Pro|t Centres  \nAn Introduction to Cost & Pro|t Centres  \n Tracking costs and revenues becomes more complex asa business grows  \n Cost and pro|t centres classify diyerent parts of a business based on their |nancial performance  \nCost Centres & Pro|t Centres  \n\n| Type | De|nition | Explanation |\n| --- | --- | --- |\n| Cost Centre |  Business units or departments that are responsible for incurring costs but do not generate revenue |  Cost centres track and manage expenses\u003Cbr> Managers can be held accountable for controlling costs\u003Cbr> Examples include functions such as\u003Cbr> Human resources\u003Cbr> Administration\u003Cbr> IT Support |\n| Pro|t Centre |  Business units or departments\u003Cbr>that generate revenue and incur costs |  Pro|t centres are expected to cover their costs and make a pro|t in their own right\u003Cbr> Managers are fully accountable for their overall |nancial performance\u003Cbr> Examples include units such as\u003Cbr> Sales departments or regions\u003Cbr> Speci|c product lines\u003Cbr> Retail outlets |\n\nPage 2 of 12  \n© 2015 − 2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  \nYour notes  \nHead to www.savemyexams. com for more awesome resources  \nAdvantages & Disadvantages of Cost & Pro|t Centres  \n The advantages and disadvantages of cost and pro|t centres can vary according to the size and typeof business  \n Multi-unit businesses, those with numerous product lines and complex businesses may bene|t extensively from using cost and/or pro|t centres  \nAdvantages & Disadvantages of Cost and Pro|t Centres  \n\n| Advantages | Disadvantages |\n| --- | --- |\n|  Can assess the performance of individual parts |  May cause rivalry between diyerent |\n| of the business | departments/units |\n|  Managers can concentrate eyortson poor- |  Negative impact on professional |\n| performing areas | relationships |\n|  Rewards for good performance can be |  'Win at all costs ' culture may ayect |\n| targeted | quality/customer service |\n|  Allows |nancial decisions to be made ata local |  Not always straightforward to separate or |\n| level | allocate costs/revenues |\n|  Prices can be set according to local market |  Businesses with multiple product lines may |\n| conditions | not be able to accurately allocate costs |\n|  Eyective control of costs by those given | between them |\n| responsibility to actually spend business |  |\n| money |  |\n|  Allows for delegation of |nancial decision- |  Requires |nancial skills and training |\n| making |  Extra demands alongside a manager 's core |\n|  Increased responsibility can motivate | role |\n| lower-level employees |  Training requires investment/time away |\n|  Increases the diversity/interest of job roles | from work |\n\n Examiner Tip  \nMany large businesses operate both cost and pro|t centres  \n Supermarket retailers such as Carrefour and Aldi operate pro|t centres for individual or groups of stores  \n They also operate cost centres for their head ozce functions such as Human Resources and Marketing  \nPage 3 of 12  \n© 2015 − 2024 Save My Exams, Ltd. · Revision Notes, Topic Questions, Past Papers  \nYour notes  \nHead to www.savemyexams. com for more awesome resources  \nBudgets & Variances  \nAn Introduction to Budgets  \n A budget is a |nancial plan showing the business costs and revenue for a given time period  \n Budgets are set for the whole business and for individual cost centres or pro|t centres  \n Budgets areset in advance (monthly, quarterly or annua) and monitored regularly  \n The budget is usually closely aligned with the business objectives  \nWhy Businesses use Budgets  \n\n| Reason | Explanation |\n| --- | --- |\n| Planning & monitoring |  Businesses that use budgets are actively plann","cbCaia8hoqocy4ha","https://ap.wps.com/l/cbCaia8hoqocy4ha","pdf",974546,"English","# Contents\n## Cost & Profit Centres\n## Advantages & Disadvantages of Cost & Profit Centres\n## Budgets & Variances\n## An Introduction to Budgets\n## Why Businesses use Budgets\n## Types of Budgets\n## A Comparison of Historical and Zero Budgeting Methods","[{\"question\":\"What is the difference between a cost centre and a profit centre?\",\"answer\":\"A cost centre is responsible for incurring costs without generating revenue, while a profit centre generates revenue and incurs costs. Profit centres are expected to cover costs and make a profit, with managers accountable for overall financial performance.\"},{\"question\":\"Why do businesses use budgets?\",\"answer\":\"Businesses use budgets for planning and monitoring, control, coordination and communication, and motivation and efficiency. Regular monitoring helps managers manage functional areas and support objective setting and review.\"},{\"question\":\"How do historical figure budgeting and zero-based budgeting differ?\",\"answer\":\"Historical figure budgets rely on prior sales and costs data and are influenced by external factors. Zero-based budgeting allocates no budget initially, so all spending must be justified, making it more time-consuming and evidence-based.\"}]","HL IB Business Management - 3.9 Budgets - Revision Notes: Cost & Profit Centres, Budgets & Variances | PDF",1789275678]