Primarily you need to concern yourself with cost of sales and cost of labor . Lets deal with cost of sales first . It is important to note here that we are in the budget stage and so operational concerns of waste management and purchasing are not contained here . Not because they are not significant simply because they are a variable that is difficult to estimate . Cost of sales at the budget stage then becomes an issue of price structure .
Pricing is a difficult issue that effects all sorts of areas .
It is then up to your operations team to manage their stock to achieve these levels . Cost of labor is again partly an operational responsibility but by setting up a realistic budget you make the process of rostering more structured . The saving of dollars at the margin is about productivity and effective fazing . In the budget process it is important to work out your minimum staffing requirements for a given period and then use the mix of permanent's and casuals to give you maximum flexibility for minimum cost . On the issue of variances to budget they are subject to the accuracy of the budget originally and can often be misleading .