CareTech Holding PLC is a United Kingdom based company that runs a several established residential care homes. The company was founded in 1993 and currently runs adult and child care homes across the country. The company’s approach to care provision allows it to support its clients in the comfort of their homes, the community, domiciliary or nursing care and various supported living arrangements (Caretech-uk.com). Being a publically traded company, CareTechHolding PLC financial soundness is crucial. Below is a review of the company’s financial management resources.
Principles of costing and business control systems that may be adopted in CareTech Holding PLC
Costrefers to the total expenses incurred by the company with regard to its operations(Gapenski and Pink). The costs incurred by CareTech Holding PLC can be divided into material cost; labour costs; and Otherexpenses.
Material costs. Material cost is the cost incurred to purchase products and services, such as inventories, that facilitate provision of effective care. All the company’s material expenses can be further divided into direct and indirect costs. Direct costs are those expenses that relate directly to a particular product or service while indirect costs are those that cannot be attributed to a specific product or service. Indirect costs are usually the costs incurred when financing goods or services that are used throughout the firm for instance, printing material and stationery expenses(Gapenski and Pink).
Labour cost. This comprisesof the expenses incurred when rewarding the firm’s employees. Employees facilitate the provision of care as well administrative functions of the company(Gapenski and Pink). Accordinglythe company might also incur labour costs in marketing activities too.
Other expenses.This category includes any overheads that do not fall under material or labour expenses for instance tax, licencing and patent costs. These costs are categorized into direct, those that can be attributed to a specific process or product, and indirect costs, those that cannot be attributed to a particular process or product. Cost management is an important facet of operational activities as it dictates the direction of the firm(Gapenski and Pink). CareTech Holding PLC manages its costs keenly and it employs a number of measures to do so. Budgetary control is the main method employed. This refers to a mechanism where a firm forecast the costs to be incurred in future and then compares the forecasted amount against the actual incurred costs (Caretech). This helps identify the costs that are above the projected amount and necessary steps are taken to reduce that amount.
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