The document discusses various topics related to managing financial resources for an organization. It covers elements of cost for a business including material, labor, and overhead costs. It also discusses information required to manage financial resources such as labor costs, material costs, overhead costs, and revenue. Regulatory requirements and accountability to stakeholders are important considerations when managing financial resources. Budgetary control is a key method used by Royal Dutch Shell PLC to manage its finances.

1. Student Name :
Submission Date :

2. Table of Contents
1. Task 1 .................................................................................................................................................... 3
1.1 Elements of Cost for a business .......................................................................................................... 3
1.2 Information for managing financial resources.............................................................................. 5
1.3 Regulatory requirements .............................................................................................................. 6
1.4 Management of financial resources ............................................................................................. 6
2. Task 2 .................................................................................................................................................... 7
2.1 sources of income for Health and social care organization ................................................................ 7
2.2 Factors affecting the ways of availability of financial resources .................................................. 9
2.3 budgetary Expenditure ..................................................................................................................... 10
2.4 Factors affecting for deciding on expenses ................................................................................ 11
3. Reference ............................................................................................................................................ 12

3. 1. Task 1
1.1 Elements of Cost for a business
Explain the various elements of cost for a business and ways to manage those cost by means of
business control systems.
In an organization the cost is one of the most significant items as it can change the direction of the
company. The cost is the amount of expenses incurred by the company with regard to its operations.
The royal Dutch Shell PLC is an global leader in energy and petrochemicals business with more than
90,000 employees and in more than 80 countries across the globe. In Royal Dutch shell PLC the costs
incurred by the company can be divided into following categories
Material Cost
Labor cost
Other overheads and Expenses
In order to carry out its operations the company incurs various costs and those can be mainly
categorized to above cost elements as follows,
Material cost
Material cost is the cost incurred to purchase and extract petroleum products such as crude oil,
petroleum etc. Further this may include expenses such as royalties and patent rights. Material cost
can be divided in to two categories. Those are,
Direct material cost
Direct material costs are the costs that can be identified with regard to a particular product. This
includes the direct material purchases such as crude oil, LP Gas and other petroleum based energy
products.
Indirect material cost
These are costs that cannot be identified directly with regard to a particular product. These materials
may be used throughout the company for all the products. Such as consumables packing material
printing and stationery material costs etc.
Labor Cost
This includes the expense incurred with regard to the employees of the Royal Dutch Shell. In order to
facilitate the production process as well the administrative and selling and distributional function

4. company needs to incur labor cost. Accordingly with regard to the company’s company may have to
incur labor cost in the oil drilling, production and refinery activities. Thus this is a major element of
the cost of the company. Labor cost of the company also can be divided in to two categories. Those
are,
Direct labor cost
These are labor costs which are directly attributable to the manufacturing and processing activities of
the company. Those may include labor costs related to oil drilling and refinery activities.
Indirect labor cost
These labor cost are not directly related to manufacturing activities. These may include labor costs
incurred for administrative and selling activities of Shell.
Other overhead and expenses
These are all other overhead and expenses other than material and labor cost incurred in the
production of goods or providing of services. These costs also divided in to two categories
Direct overhead expenses
Those are overhead expenses that are directly attributable to a certain product or process of shell.
Those expenses may include expenses such as patent expenses and other overheads directly related
to manufacturing process.
Indirect overhead expenses
Those are overhead expense incurred by the company in general instead of incurring to a specific
product or process.
Managing cost is an essential element in operational activities. As these costs may be adversely
impact on the company’s performance. Royal Dutch shell PLC is keen on the costs incurred by the
company from its operations. Thus company has taken several measures to manage those costs.
Budgetary control is one mechanism whereby company forecast a certain amount as the cost and
compares such cost with the amount actually incurred. Thereby it identifies the costs which that are
exceed the expected amount and take necessary steps to reduce those.

5. 1.2 Information for managing financial resources
What kind of information is required to manage financial resources?
Managing financial resources is a challenging and important task in the organization as it has direct
relationship with the profitability of the company. In order to manage financial resources the
company needs to identify the financial resource requirement of the company for a particular period.
Accordingly to manage financial resources the organization may need information with regard to
following aspects.
Labor cost
Labor cost is one of the significant costs incurred by the company thus, to manage financial resources
the company needs to have information relating to the labor force and man power requirement of
the company to carry out its operations.
Material cost
In order to manage material cost and thereby manage financial resources of the organization the
company needs to identify the material requirement of the company and needs to decide the
optimum material amount that company should procure and maintain to manage the financial
resources.
Other overhead cost
By identifying the appropriate amount of overhead expenses, the company can manage it financial
resources effectively. Accordingly overhead expenses such as rent, rates maintenance etc needs to
be properly identified and should estimate the appropriate amount.
Apart from costs attention needs to be give to the revenue generated by the company. Accordingly
the revenue generated by the company generates financial resources to the company therefore to
manage the financial resource the company needs to have information with regard to the revenue of
the company.
Moreover the company needs to have information about the external forces such as competitiveness
etc as those may have an impact on the financial resources of the company. Further legal and
regulatory activities may also affect to the financial resources of the company. For example new
regulation may have an impact to an outflow of financial resources. Therefore it can be concluded
that in order to manage financial resources the company needs to have information with regard to
every aspect of its operations.

6. 1.3 Regulatory requirements
While you are managing financial resources of your organization, you need to fulfill some regulatory
requirements, discuss them.
When managing financial resources of the organization there are certain aspects that the company
needs to make sure that those are addressed and duly complied with. If not, those may have an
impact on the overall operations of the company. More specifically companies in regulated industries
such as banking and financial market, power and energy sector companies have to comply with lots
of rules and regulations and if not such violation may affect to the company’s operations.
Further as per the best practices followed by companies, company needs to incur some expenditure
on corporate social responsibility activities. Moreover attention should be given to the policies of the
company when managing financial resources.
Accountability towards the stakeholders of the company also needs to be complied with when
managing the financial resources of the company. This is because certain stake holders may be
interested about the company’s policy and ways in which managing financial resources.
1.4 Management of financial resources
For your selected organization, evaluate the system in practice for better management of financial
resources. Do you have suggestion and recommendation to improve the current practices?
In the Royal Dutch Shell PLC the management of financial resources is done in several ways among
other methods budgetary control is one of the key methods that they used to manage finance. As the
cost of petroleum products fluctuates periodically budgeting has become a challenging task to Royal
Dutch shell PLC. Moreover the company not only relies on cost to control its financial resource but
pay attention on the revenue generated by the company. Accordingly the company has following
revenue sources
Revenue from sale of crude oil
Electricity generation
Sale of refined petroleum products
Sale of other industrial chemicals
The company develops their budget based on the previous year’s financial information and the
anticipated future changes in the market. As the petroleum prices are fluctuating daily the company
cannot rely solely on the historical financial information to manage its financial resources.
Accordingly based on the current information future trends are forecasted and based on this budget

7. is prepared and control activities are initiated to control the financial resources. Moreover control
activities have become a part of the duties of the employees of the company and thereby company
was able to properly carry out the budgetary control activities. Moreover budgetary control activities
were linked to the compensation of the top level management and therefore the management is
concentrates highly on the budgetary control. Apart from those the company has established some
Key performance indicators relating to managing financial resources.
In order to strengthen its activities relates to financial resources the company has implemented a
effective internal control system which is oversight by the board of directors continuously. Futher
effectiveness of the internal control system over financial reporting is evaluated by the external
auditors of the company annually.
By the above means the Royal Dutch Shell PLC company ensures that the company’s financial
resource management activities are carried out effectively and reporting over such activities to the
stake holder of the organization.
2. Task 2
2.1 sources of income for Health and social care organization
List and explain the different sources of income for health and social care organization. Also list what
sources of income are there in your selected organizations.
Health and social care organizations may be ranged from profit oriented companies to not for profit
organizations. Health care organization may be providing various products and services such as
manufacturing of drugs, surgical and hospital equipments etc. further companies who is engaged in
providing hospital services also can be considered as health and social care organizations. Profit
oriented multinational organizations such as GlaxoSmithKline, Oxfam etc to not for profit
organizations such as International Red Cross, United Nations etc.
Those health and social care organizations have different sources of revenues. Those revenues can
be classified in to following categories.
Revenue from Pharmaceutical and vaccines
These are the revenue generated by the companies through the sale of pharmaceutical items and
vaccines to customers for various deceased.
Revenue from medical equipments

8. This is the revenue generated by the health care companies by sale of medical equipments to the
hospitals, other health care companies those may include all the related medical equipments such as
surgical equipments laboratory equipments etc.
Revenue from consumer healthcare products
These are revenue generated by healthcare companies through the sale of personnel care products
such as body lotions, shampoo and other products.
When consider the not for profit organizations the donations are the main source of revenue.
In Jonson and Jonson which is one of the leading US based multinational pharmaceutical and medical
services company. The category wise sales of the company for the financial year 2011 is as follows,
Consumer and personnel care sales
2011($ 2010 ($
Mn) Mn)
OTC Pharmaceuticals & 4,402 4,549
Nutritionals
Skin Care 3,715 3,452
Baby Care 2,340 2,209
Women’s Health 1,792 1,844
Oral Care 1,624 1,526
Wound Care/ Other 1,010 1,010
(Source Jonson & Jonson Annual report 2011)
Pharmaceutical sales
2011($ 2010 ($
Mn) Mn)
REMICADE® (infliximab) 5,492 4,610
PROCRIT®/EPREX® (Epoetin 1,623 1,934
alfa)
RISPERDAL® CONSTA® 1,583 1,500
(risperidone)
VELCADE® (bortezomib) 1,274 1,080
CONCERTA® 1,268 1,319
(methylphenidate HCl)
PREZISTA® (darunavir) 1,211 857
ACIPHEX®/PARIET® 975 1,006
(rabeprazole sodium)
LEVAQUIN®/FLOXIN® 623 1,357
(levofloxacin/ofloxacin)

9. Other Pharmaceuticals 10,319 8,733
(Source Jonson & Jonson Annual report 2011)
Medical Equipments sales
2011($ 2010 ($
Mn) Mn)
DEPUY® 5,809 5,585
ETHICON ENDO-SURGERY® 5,080 4,758
ETHICON® 4,870 4,503
Vision Care 2,916 2,680
Diabetes Care 2,652 2,470
Cardiovascular Care* 2,288 2,552
ORTHO-CLINICAL 2,164 2,053
DIAGNOSTICS®
(Source Jonson & Jonson Annual report 2011)
2.2 Factors affecting the ways of availability of financial resources
What factors affect in what ways upon the availability of financial resources for health and social
care organizations? Which factor do you think is most prominent in all, in your opinion?
When considering the financial resources of health and pharmaceutical companies certain factors are
affecting to the availability and the requirement. Among other factors the company’s long term goals
and objectives plays a major role in this regard. Accordingly the company may be consider in
expanding in to new areas or it may be focusing on existing market to grow in such market.
Another important factor is that the ways in which the company finances its financial resources. If
the company relies more on debt finance rather that equity finance the company may face to
liquidity threats and going concern issues. Further if the company concentrates on equity finance
then the share holders expectations needs to be considered.
Another major factor that affects to financial resources of a health and social care organization is that
the amount of research and development cost that the company planed and committed to incur in
the future periods. As research and development is one of most important aspect of health care
company needs to pay attention to this when considering its financial resources.
Further government policy towards the activities of the health and social care organizations may also
have a impact to the financial resources of the company. In some countries government may grant
financial assistance to health and social care organizations due to the contribution they make to
uplift the living hood of the people. Further organization may receive other means of benefits such as

10. tax concessions, resources to carry out research and development activities etc. Thus it can be noted
that there are several factors that affects to the financial resources of the health and social care
organizations.
Further 3 Es concept can be considered when managing financial resources.
Economic
In this case the attention should be given to what is less cost way which saves financial resources of
the company when making financial decisions.
Efficiency
This refers to the fact that the maximum amount of output needs to be obtained by using minimum
level of financial resources.
Effectiveness
This refers to the level of objectives are achieved in the form of financial resources to the
organization.
Among other factors the company’s long term goals and objectives plays a vital role in determining
financial resources of an health and social care organization as such objectives sets the future
direction of the organization.
2.3 budgetary Expenditure
What kinds of budgetary expenditure are there for your organizations?
In a health and social care organization it can be found that budgetary control is an effective way of
managing its financial resources. Thus the company has established a budgetary control system
within the company concentrating on the cost centers of the organization. The company has
identified several cost centers in the organization and established effective budgetary control system
in those cost centers. Such cost centers includes following divisions of the organization.
Research and development division
As the research and development activities plays a major role in a health and social care
organization. Accordingly, Companies needs to make sure that the research and development
activities are carried out without affecting to the financial resources adversely. Further due attention

11. is given when applying budgetary control activities to the research and development activities as
those research and development activities are very important to companies in this kind.
Finance and planning division
This is also a cost center where the organization control expenses related to this division through
budgetary control. Accordingly in Jonson and Jonson budgetary control has implemented in relation
to finance and planning activities.
Further as a measure of budgetary control Jonson and Jonson can outsource some activities of the
organization which will helps to improve the financial resources of the company. Accordingly
supporting functions of the organization which helps to carry out main activities can be outsourced
to outsourcing activities. Those activities may include finance activities, logistics operations etc.
2.4 Factors affecting for deciding on expenses
Which factor do you consider while deciding about any expenditure in health and social care? Which
is most important and effective in your opinion, analyze it critically.
There are lots of factors affects the decision about any expenditure of an health and social care
organization. Accordingly such factors may include.
Goals and objectives of the organization
Long term, Medium term and short term goals and objectives are important factor when deciding
about an expenditure of the organization. For example in Jonson and Jonson if the company is
incurring some expenditure which is directly links with the achieving of goals and objectives, the
company needs to incur such expenses. Further if the company is incurring expenses which may not
helps in achieving goals and objectives such expenses needs to be carefully analyzed and controlled.
Cost benefit analysis
Attention should be given by Jonson and Jonson as to whether such expenses incurred are benefitted
the company subsequently. Accordingly of the company is benefitted through the expenses it
incurred such expenses needs to be carried out while expenses that does not provide benefits more
than the expenses incurred needs to be controlled.
Environmental implication

12. Attention should be given by the company as to whether the expenses incurred are does not affect
environmental adversely. If Jonson and Jonson incurs such expenses that affect to environment
adversely those expenses needs to be controlled. Further if the company incurs any expense for the
benefits environment such expenses needs to be maintained.
Accountability
When incurring expenses Jonson and Jonson needs to consider the accountability towards the stake
holders of the company. Accordingly the expenses incurred needs to be disclosed properly to the
stake holders of the company and attention should be given whether the expenses are incurred
which will in turn increase the share holders’ value.
Importance of the expense
The company needs to consider the importance on the expense incurred by the company. If the
expense incurred is important to carry out the company’s performance then such expenses needs to
be incurred. If the expenses are not such important to carry out operation such expenses needs to be
controlled to maximize the financial resources.
3. Reference
1. Jonson & Jonson ,2011, Jonson & Jonson, (www.JnJ.com) , viewed 21 April 2012
2. Royal Dutch Shell, 2011,Royal Dutch shell, (www.shell.com) , viewed 21 April 2012
3. Lewis, R. & D. Pendrill, (2004) Advanced Financial Accounting, (7th ed.),
Prentice Hall,
Atrill, P. & E. McLaney, (2002) Financial Accounting for Non-specialists,(3rd
ed.) Prentice Hall
4. Alexander, D. & A. Britton, (2004) Financial Reporting, (7th ed.), Thomson
5. Social Science Research network,2011, Social Science research network (www.SSRN.com) viewed 21
April 2012.
6. Emeralinsight,2011,Emeralinsight, (http://emeralinsight.com/), viewed 21 April 2012.