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INTRODUCTION

In any organisation to achieve desired success and its objectives, there is a need of implementing some analytical tools. One of them is budget tool which is very useful for any organisation. By preparing various budgets and compare them with actuals figures, an company can identify the areas where it need to give time to remove the negative variances (Thangavelautham, 2018). This report is divided into three task and each task is having different scenario. First task and second task describes about the making budgets of restaurant & bar company by taking different divisions revenues while task third is all about certain issues that are faced by the a company in this industry.

TASK 1

 Budget Forecast

 

 

 

 

 

 

 

 

Total Revenue 2016

 $1,12,13,138.73

 

 $1,30,40,730.97

Forecasted 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Room Budget

 

 

Forecast $

Forecast %

Expenses Analysis

Rooms Available

63875

100%

61320

96%

COGS

 $11,03,760.00

15%

Rooms Occupied

51548

 

49056

 

Staff costs

 $14,71,680.00

20%

Total Occupancy %

80.70

80.70%

80%

80%

Other Expenses

 $5,88,672.00

8%

Revenue Per Available Room

 $134.80

 

 $150.00

111%

Total Expenses

 $31,64,112.00

 

Total Room Revenue

 $69,48,897.21

 

 $73,58,400.00

105.89

 

 

 

 

 

 

 

 

 

 

 

Total Catering Revenue

 $42,64,241.52

 

 $56,82,330.97 

 

 

 

 

 

 

 

 

 

 

 

 

Food Budget (Restaurants)

 

 

 

 

Expenses Analysis

Total Revenue

 $20,19,370.53

 

 $23,02,728.07

 

COGS

 $6,86,443.24

29.81%

Food Revenue

 $17,40,112.81

86.17%

 $20,01,129.73

115%

Staff costs

 $10,13,200.35

44%

Beverage Revenue

 $2,79,257.72

13.83%

 $3,01,598.34

108%

Other Expenses

 $1,61,190.96

7%

 

 

 

 

 

Total Expenses

 $18,60,834.55

 

 

 

 

 

 

 

 

 

Banquet Budget

 

 

 

 

Expenses Analysis

Total Revenue

 $13,13,940.16

 

 $23,21,539.45

 

COGS

 $6,03,600.26

26%

Food Revenue

 $11,30,203.33

86.02%

 $20,00,000.00

177%

Staff costs

 $4,41,092.50

19%

Beverage Revenue

 $1,83,736.83

13.98%

 $3,21,539.45

175%

Other Expenses

 $3,25,015.52

14%

 

 

 

 

 

 

 

 

Room Service Budget

 

 

 

 

Expenses Analysis

Total Revenue

 $4,17,442.15

 

 $4,67,811.65

 

COGS

 $1,18,075.66

25.24%

Food Revenue

 $3,35,796.64

80.44%

 $3,86,166.14

115%

Staff costs

 $1,59,055.96

34%

Beverage Revenue

 $34,668.69

8.31%

 $34,668.69

100%

Other Expenses

 $26,057.11

5.57%

Other Revenue

 $46,976.82

11.25%

 $46,976.82

100%

 

 

 

 

 

 

 

 

 

 

 

Mini Bar Budget

 

 

 

 

Expenses Analysis

Total Revenue

 $1,46,471.02

 

 $1,46,471.02

 

COGS

 $35,782.87

24.43%

Beverage Revenue / Mini bar

 $1,46,471.02

100%

 $1,46,471.02

100%

Staff costs

 $55,512.52

37.90%

Other Revenue

 $-   

 

 $-   

 

Other Expenses

 $18,894.76

12.90%

 

 

 

 

 

 

 

 

Bar Budget

 

 

 

 

Expenses Analysis

Total Revenue

 $3,67,017.66

 

 $4,43,780.79

 

COGS

 $1,38,015.82

31.10%

Food Revenue

 $67,191.88

18.31%

 $83,989.85

125%

Staff costs

 $1,59,761.08

36%

Beverage Revenue

 $2,99,825.78

81.69%

 $3,59,790.94

120%

Other Expenses

 $79,880.54

18%

TASK 2

Budget Forecast

Turnover

Customer numbers

Average Spend (Food)

Food Revenue

Average Spend (Beverage)

Beverage Revenue

Total

Profit

Overheads

COGS - Food & Beverage

Staff Costs

Other Overheads

 

 

 

 

 

 

 

 

 

 

 

 

January

2000

 $38.00

 $76,000.00

 $5.70

 $11,400.00

 $87,400.00

 $8,740.00

 $78,660.00

 $27,968.00

 $27,094.00

 $23,598.00

February

845

 $29.80

 $25,181.00

 $5.50

 $4,647.50

 $29,828.50

 $1,193.14

 $28,635.36

 $9,545.12

 $10,439.98

 $8,650.27

March

756

 $25.60

 $19,353.60

 $5.50

 $4,158.00

 $23,511.60

 $940.46

 $22,571.14

 $7,523.71

 $8,229.06

 $6,818.36

April

258

 $26.00

 $6,708.00

 $5.50

 $1,419.00

 $8,127.00

 $325.08

 $7,801.92

 $2,600.64

 $2,844.45

 $2,356.83

May

658

 $24.50

 $16,121.00

 $5.50

 $3,619.00

 $19,740.00

 $789.60

 $18,950.40

 $6,316.80

 $6,909.00

 $5,724.60

June

758

 $27.20

 $20,617.60

 $5.50

 $4,169.00

 $24,786.60

 $991.46

 $23,795.14

 $7,931.71

 $8,675.31

 $7,188.11

July

489

 $29.10

 $14,229.90

 $5.50

 $2,689.50

 $16,919.40

 $676.78

 $16,242.62

 $5,414.21

 $5,921.79

 $4,906.63

August

879

 $28.00

 $24,612.00

 $5.50

 $4,834.50

 $29,446.50

 $1,177.86

 $28,268.64

 $9,422.88

 $10,306.28

 $8,539.49

September

1057

 $27.60

 $29,173.20

 $5.50

 $5,813.50

 $34,986.70

 $3,498.67

 $31,488.03

 $11,195.74

 $10,845.88

 $9,446.41

October

989

 $28.10

 $27,790.90

 $5.50

 $5,439.50

 $33,230.40

 $1,329.22

 $31,901.18

 $10,633.73

 $11,630.64

 $9,636.82

November

1259

 $32.50

 $40,917.50

 $5.50

 $6,924.50

 $47,842.00

 $4,784.20

 $43,057.80

 $15,309.44

 $14,831.02

 $12,917.34

December

1659

 $32.80

 $54,415.20

 $5.50

 $9,124.50

 $63,539.70

 $6,353.97

 $57,185.73

 $20,332.70

 $19,697.31

 $17,155.72

 

 

 

 

 

Crosscheck

 $4,19,358.40

 $30,800.44

 $3,88,557.96

 $1,34,194.69

 $1,37,424.70

 $1,16,938.57

Total

 

 

 $3,55,119.90

 

 $64,238.50

 $4,19,358.40

 $30,800.44

Crosscheck

 

 

 

 

Revised Budget Forecast

Turnover

Customer numbers

Average Spend (Food)

Food Revenue

Average Spend (Beverage)

Beverage Revenue

Total

Profit

Overheads

COGS - Food & Beverage

Staff Costs

Other Overheads

 

 

 

 

 

 

 

 

 

 

 

 

January

1850

 $45.00

 $83,250.00

 $9.70

 $17,945.00

 $1,01,195.00

 $10,119.50

 $91,075.50

 $32,382.40

 $31,370.45

 $27,322.65

February

2000

 $37.00

 $74,000.00

 $9.70

 $19,400.00

 $93,400.00

 $9,340.00

 $84,060.00

 $29,888.00

 $28,954.00

 $25,218.00

March

700

 $42.00

 $29,400.00

 $9.70

 $6,790.00

 $36,190.00

 $1,447.60

 $34,742.40

 $11,580.80

 $12,666.50

 $10,495.10

April

1200

 $48.00

 $57,600.00

 $9.70

 $11,640.00

 $69,240.00

 $6,924.00

 $62,316.00

 $22,156.80

 $21,464.40

 $18,694.80

May

1200

 $36.50

 $43,800.00

 $9.70

 $11,640.00

 $55,440.00

 $5,544.00

 $49,896.00

 $17,740.80

 $17,186.40

 $14,968.80

June

600

 $35.00

 $21,000.00

 $9.70

 $5,820.00

 $26,820.00

 $1,072.80

 $25,747.20

 $8,582.40

 $8,314.20

 $8,850.60

July

950

 $34.00

 $32,300.00

 $9.70

 $9,215.00

 $41,515.00

 $1,660.60

 $39,854.40

 $13,284.80

 $12,869.65

 $13,699.95

August

800

 $38.00

 $30,400.00

 $9.70

 $7,760.00

 $38,160.00

 $1,526.40

 $36,633.60

 $12,211.20

 $11,829.60

 $12,592.80

September

900

 $29.00

 $26,100.00

 $9.70

 $8,730.00

 $34,830.00

 $1,393.20

 $33,436.80

 $11,145.60

 $10,797.30

 $11,493.90

October

650

 $29.50

 $19,175.00

 $9.70

 $6,305.00

 $25,480.00

 $1,019.20

 $24,460.80

 $8,153.60

 $7,898.80

 $8,408.40

November

980

 $35.50

 $34,790.00

 $9.70

 $9,506.00

 $44,296.00

 $1,771.84

 $42,524.16

 $14,174.72

 $13,731.76

 $14,617.68

December

2200

 $48.00

 $1,05,600.00

 $9.70

 $21,340.00

 $1,26,940.00

 $12,694.00

 $1,14,246.00

 $40,620.80

 $39,351.40

 $34,273.80

 

 

 

 

 

Crosscheck

 $6,93,506.00

 $54,513.14

 $6,38,992.86

 $2,21,921.92

 $2,16,434.46

 $2,00,636.48

Total

 

 

 $5,57,415.00

 

 $1,36,091.00

 $6,93,506.00

 $54,513.14

Crosscheck

 

 

 

TASK 3

Scenario 1:

It is analysed  that the finance team of Hotel XYZ hotel analysed the factors for last three  years subject to analyse the accuracy with in operations. The current budget is mainly associated with analysing the requirements of resources for formation of budget. The recent budget that contains the developments for the hotel was implemented for three months and forecasted with food and the cost of goods sold in both the restaurants (Hunt, 2018). The Bar operations have also blown out by nearly 4.5%.

While evaluating the budget it is evaluated that managers conclude all the three year's budget combine without categorising their range and development nature. The food cost and the cost of goods sold get increased due to combining the forecasted results and the beverage sales. The hotel manager figure out the operations which were remain same for both the years. Following five examples are defined as follows;

The vast majority who've assembled frequently state they wish they'd invested more energy arranging their work, before development really began.  You might be quick to begin, however you'll spare time over the long haul by investing more energy in arranging in the beginning times.

Consuming long time to build a budget

It's a lot less demanding to change things on an arrangement, than it is to begin moving blocks and mortar or changing pipes and wiring. The vast majority who've assembled frequently state they wish they'd invested more energy arranging their work, before development really began. For example in a construction project, It's a lot less demanding to change things on an arrangement, than it is to begin moving blocks and mortar or changing pipes and wiring.

Wrong assumptions:

Ambiguous or low quality documentation can influence the exactness of the statement you get. It implies that everybody associated with the citing procedure needs to make suppositions. This leaves space for mistake and costing errors. For example if assumption in  terms of managing the  

Under-cast and overcasting of budget

It's normal to need to get precisely what you need when you assemble your fantasy home. Be that as it may, shockingly a large portion of us have a restricted budget plans.. it spares time and cash over the long haul (Cull, 2017). In any case, you likewise need to comprehend the cost ramifications of the decisions you make. For instance, high roofs will require non-standard windows and could likewise expand the expense of inward coating, outer cladding, lighting and framework. It cautiously considers the underlying choices you make. A decent developer ought to have the capacity to help direct you through this procedure

Regular changes in budgets

if the variation made on continuously basis it is analysed that figures also present differences with last year's forecasted results and information. It is essential to maintain an adequate level and constant structure of making the budget for getting accurate results.

Scenario 2

  1. Change in consumer taste and preference:

One of the major factor which can influence trends is unfavourable changes in taste and preference. Change in consumer taste and preference can affects revenue of hotel. If facilities or additional services are not provided by hotel as per change in requirement of customers , than this will affect a large customer group.

  1. Competition

Competition is another factor that influence trends. A large competitor with new ideas and more resources creates a tuff competition, and affects revenue of exiting Hotels.

  1. Legal Factors

An unfavourable change in the law and order affect company's trends. New regulations imposed by regulatory authorities can affect profits and budgeted figures. Increase in taxes and increase in cost of essential items for hotel, are also coming under these factors which can affect trends of Hotel.

  1. Recession:

Recession is also an indicator which creates negative trends in near future. Due to recession in economy, sudden decrease in customers, revenue or net profit can be happen.

  1. Inflation:

Inflation means uneven rise in prices and wages, that results in decrease in purchasing power of customers (Gromski, 2019). Customer tries to avoid spending money for luxurious facilities provides by hotel to customers, due to to reduction in purchasing power of customers.

There are following methods which helps to determine the external factors  which could contribute towards opposite or negative trends:

Qualitative Method

In this method is based on subjective approach, under this management analyse industry, market research, and expert opinion to forecast possible trends seems to be occurred. In qualitative data less importance is given towards quantitative data of past years. A scenario is deeply analysed by management to forecast incoming trends.   

Quantitative Method:

This method emphasises on quantitative or monetary data of past years. Result from this method is required for forecasting of trends for short period and for planning purpose (Orimoloye, 2019). Deep analysis of quantitative data or information  is done through various budgets, memorandum reports or statements, comparison with industry data or competitive performance etc.

Causal method:

Under this method estimation of factors and possible trends are done through analysing relationship between major things like upturn or downturn in sales, increase or decrease in decrease in purchasing power of customer, change in inflation etc. using monetary and non monetary values or trends. Such analysis of  relationship helps to identify the factors and possible trends.

Scenario 3

  1. Reports preparation in various conditions:

After observing above two issues as given in the brief, there is need to provide two type of report which are as follows:

Budget variance analysis report:

In this report, after setting the budget for coming year and after the actual results comes, the management starts comparing the actuals with the budgets to know the variances. At this time, variances from the budget are identified, and the management has to dig deep to find out the reasons for such variances (Ray, Alhalhooly and et., 2019). This analysis also requires investigation of these variances which helps the management to interpret as to why such variance or differences occurred.

In the given issue, there is a variance of $ 13467 between budget and actual figures for Kitchen/food cost. The budgeted figure of this cost is 28% of total revenue and actual is 32% of total revenue. This means that there is a negative performances of this department of organisation. This report should also describe the reasons behind this negative variance.        

Inventory Report:  

An inventory report is a summary of stock items that a company kept belonging to a business, industry, organization, or home. It provides a comprehensive account of the stock or supply of various items. This reports include list of each and every items of company along with its unit price. It also includes details about any extra cost or savings which incurred at the time of purchase.

In the given problem, cash flow problem is generated due to excess purchasing of bottles. Although, there is a savings of $ 30 per bottle. Therefore, this issue need to be addressed in this report.

2. As the appointment of F&B manager it purchased 240 bottles at the rate of $90 which represents a saving of $30 per bottle. It increase the stock level by 220 bottles and created a cash flow problem. So store manager and F&B manager should involve in this matter because there was a variance of (-)$ 13467  in budget and actual (Yang, Kumara, Bukkapatnam and Tsung, 2018).  It is not beneficial for hotel because it faces the problem of cash so store manager of organisation should know how to maintain the inventory  so that this huge variance does not create in budget and actual. It should able to analyse the stock   requirements and monitor it on regular basis as a result appropriate order can be placed which help to control the unnecessary inventory. Unnecessary expenses can also be minimize which can resolve the problem of cash flow and it used by in day to day operational work. Finance and Budget manager of hotel should properly analyse the expense which are occurred to purchase the bottles of hill of blessings. Funds can be provided after proper verification and need of cash on regular basis should also be analyse be analysed properly and on the basis of it stock should be buy. As a result organisation does not face the problem of cash.  

  1. Options to rectify certain issues:

In the given issues, there is a requirement to rectify these problems for organisation's perspective. For this company should do the following steps which are:

  • In resolving first issue, firstly, there is a need to deeply assess reason for happening differences between budgets and actuals figures (Rowley, Bennett and Schmidt, 2019). Afterwards, if this is not due to casual reason than company should take corrective action to to eliminate these variances.
  • In resolving cash flow problem, company may take short term finance from financial institutions so that it can buy higher bottles at a saving of $ 30 per bottle but the savings are not less than the cost of obtaining short term finance (interest cost).   

4 Cash flow issues:

For resolving this issue, company should either agree the  supplier for supply the bottles at a given price which $90 per bottle with reduced quantity of bottles so that cash flow issues can be solved or company can take short term loan to deal the cash flow problem.

CONCLUSION

From the above report it is concluded that preparing budget and monitoring trends is required in order to evaluate performance and to identify possible outcomes or events. In tourism, travel, hospitality and event sector budget preparation helps to identify major indicators that affects business trend directly or indirectly. Though preparation of budget helps management  to set prioritize of spending and to reduce cost.

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REFERENCES

  • Thangavelautham, J. and et. al., 2018, July. On-Orbit Monitoring of Meteor Impacts Using CubeSats. In 42nd COSPAR Scientific Assembly (Vol. 42).
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  • Cull, M., 2017. Cash flow, budgeting and managing credit. Financial Planning in Australia, pp.145-195.
  • Gromski, P.S. And et. al., 2019. How to explore chemical space using algorithms and automation. Nature Reviews Chemistry, p.1.
  • Ray, P., Alhalhooly, L. and et. al., 2019. Size-transformable, Multi-functional Nanoparticles from Hyperbranched Polymers for Environment-specific Therapeutic Delivery. ACS Biomaterials Science & Engineering.
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  • Rowley, J., Bennett, D. and Schmidt, P. eds., 2019. Leadership of Pedagogy and Curriculum in Higher Music Education. Routledge.
  • Orimoloye, I.R. And et. al., 2019. Implications of climate variability and change on urban and human health: A review. Cities.