A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
Appendix 1 Appendix 2 Appendix 3
14. Monitoring: With a budget set up under cost centres and
broken down into monthly income and expenditure you will
have all the information you need to monitor the month-by-month
performance of individual contracts against your original
budget predictions. This is a powerful tool for checking that
your calculations were right and that the contract or project is
running properly.
15. Notes: sharing ‘indirect costs’ among relevant cost centres
(see paragraph 3): There is nothing absolute in the idea of
allocating a proportion of core costs to a number of separate cost
centres, and you will need to use your judgement and sometimes
just informed guesswork to assess how costs should be shared out
appropriately. Here are a few tips:
• estimate what percentage of the manager’s and administrator’s
time is devoted to the work of each cost centre (project or
activity), and use this figure to calculate the proportion of
the total cost of employing them which should be borne by
each cost centre
• estimate the portion of the space in the office occupied by (or
the amount your office facilities are used by) each cost centre
activity; then use these percentage figures to share out the rent
and other items such as power and stationery etc
• for some items (the annual audit and bank charges, for instance)
the share of costs borne by each cost centre can be related to
the total turnover of each
• try to get agreement among the staff involved – you don’t want
grievances that one project is not bearing its fair share of the
phone bill, for instance
• keep things in proportion – it will make very little difference to
unit costs whatever way you share out an annual expenditure of
only £50
• if you decide later that the apportioning of costs or time or
space could be improved on, don’t be afraid to make individual
adjustments.
• keep the arithmetic simple: an approximate breakdown of
the Administrator’s time, for example, on the lines of 25%
headquarters, 50% care attendants scheme and 25% ‘Lottery
Project’ could be all you need
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