Profit And Expense Control

All business activities are divided into major categories of income and expense (sales, cost of revenue, various levels of operating expenses and profit). The objective of the control system is to limit allowable expenses necessary to "buy" sales revenue and place them in a sequence that will enable management to monitor the activities on a monthly basis, determine variances from plans and correct any problems which will effect profit. 1.3 The Control System is a measuring device or management tool which enables the company management to measure and evaluate the performance of the key personnel and for the key personnel to measure and evaluate themselves and their departments. 1.4 For measuring purposes, a year's sales and expenses are divided into twelve calendar months. It is a well known fact that every calendar month will not produce the same results; however, the high and low periods have a way of arranging themselves into compensating groups that permit accurate measurements and evaluations. 1.5 The system places each profit center under the control of one individual who is responsible for all results achieved from that control.