Cost and Performance Management

Cost and Performance Management
6/7/2019

Cost and performance management 1
Executive summary
Budgeting is one of the most important tools that are used by the company to analyse
where the company is and where it wants to reach in future. In this report, The Hotel
Elephant has been considered to understand the implications of the budget and whether the
situation is favourable or not for the hotel. The report also talks about the control of the cost
and the overall recommendations to enhance the performance of the Hotel Elephant.

Cost and performance management 2
Table of Contents
Introduction...........................................................................................................................................3
Part 1.....................................................................................................................................................3
Cost control...........................................................................................................................................3
Part 2.....................................................................................................................................................4
Performance Analysis............................................................................................................................4
Part 3.....................................................................................................................................................5
Cost and Revenue Analysis...................................................................................................................5
Make a plan...........................................................................................................................................6
Recommendations.................................................................................................................................6
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8
Appendix...............................................................................................................................................9

Cost and performance management 3
Introduction
Budgeting in the tourism sector is the one of the most crucial factor in growing the
industry of the tourism and hospitality. It acts as a planning pillar that can create a way for
the management to move ahead and secure greater market share in the industry. It not covers
a specific time frame at the same time with the help of the financial plans the company has
the clarity what the actual destination is. In order to find out the income statement is prepared
and it is compared against the budgeted results. If there are any variance it can be found out
and the necessary initiatives can be taken to overcome the situation. The budgets are
necessary for the strategic decision making and the internal development of the organization
(Vukovic, 2016).
Planning and cost control incorporates the nutty gritty estimation of costs, the setting of
concurred spending plans, and control of expenses against that financial limit. Planning of the
budget incorporates the three major stages which are, arranging, control of the costs and
auditing (Turner, 2017). It will probably include the following scenarios as well.
 Decide the salary and consumption profiles for the work;
 Create spending plans and line up with subsidizing;
 Actualize frameworks to oversee salary and consumption
Part 1
Cost control
There are different types of the cost associated with the Hotel Elephant, which can be
bifurcated into the fixed and the variable expenses. The fixed expenses are of static nature
and they are bound to be incurred irrespective of the years. The variable expense on the other
hand is those which are of irregular nature and might fluctuate. As per the income statement
of the Hotel Elephant the following are the fixed and the variable expenses and the
recommendations on how to control them (Ivanova, Ivano & Magnini, 2016).
 Advertising expenses are the one that have been higher than the budgeted amount.
The advertising costs have been increased from $3937 to $4953. These costs can be
controlled by understanding the fact that at times the marketing is not understood by a
large mass and just throwing money on the advertising would only increase the cost of