Finance and Funding in the Travel and Tourism Assignment - Carnival Corporation & Plc
Added on 2020-10-22
17 Pages5364 Words294 Views
Finance and Funding in the Travel and TourismSector
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1.1 Importance of cost and volume in financial management of Carnival Corporation Plc.1P1.2 Analysis of pricing methods used in the travel and tourism sector................................2P1.3 Analysis of factors influencing profits of Carnival Corporation Plc.............................3Planning, & staff:An appropriate financial planning at Carnival Corporation Plc. must be helpfulfor a better profitability. An efficient staff management leads to affect the performance ability ofan employee positively....................................................................................................................5TASK 2............................................................................................................................................52.2 Use of management accounting information as a decision making tool..........................62.1 Different types of management accounting systems........................................................6TASK 3............................................................................................................................................73.1 Interpretation of financial accounts of Dalata Hotel Group Plc for two years 2016 and2017........................................................................................................................................7TASK 4............................................................................................................................................94.1 Sources of funding and distribution of funds for development of capital projects for publicand non-public tourism development.....................................................................................9CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONFor an organisation in travel and tourism sector, it is important to manage the finance andfunding. For any business, the most important part for running a business is finance, so it is veryimportant to know from where the funds will generate and how the financial resources will bemanaged. In this report, an evaluation of funding and finance in respect of travel and tourismsector is done for Carnival Corporation & Plc. For this, an analysis of cost volume and profits aredone along with the evaluation of pricing strategies. All the factors related to profit are alsoanalysed. An analysis regarding Dalata hotel Group plc is done here. This is done consideringthe financial accounts of hotel and distribution of funds for development of tourism.TASK 1P1.1 Importance of cost and volume in financial management of Carnival Corporation Plc.Cost means the amount paid to the staff or employees of the organisation for providingtravel services to people. Cost is incurred for the use of goods and services so that outputservices can be provided. Different types of costs incurred are:Direct costs: The direct cost includes direct materials, direct labour, piece rate wages,commission and manufacturing supplies (Khidmat and Rehman, 2014). In travel industry, thedirect cost is wages to staff and material consumed for providing the services. The commissionpaid to the agents and hotels are a pary off direct cost.Indirect costs: This is the cost which is incurred for operations of business activities.This cost is necessary for running the business. The cost includes overhead expenses such as rentand utilities, administrative expenses such as office salary, cost of accounting and personneldepartment.Fixed costs: This cost is the one which has to be incurred essentially. This is incurredirrespective of the volume of production or sales. In the travel and tourism sector, the fixed costcan be in respect of rent of the premises, salaries and wage, as this cost has to be paidirrespective with increase or decrease in number of people. Travelling.Variable cost: The variable cost differs with change in output be it sales or production.An increase in sales will raise variable cost and a decrease in sale will lower variable cost. Thevariable cost can be salaries to drivers and rents of vehicles. 1
Allocation: A proper allocation of cost is very necessary for a business. Allocation meansto identify, aggregate and assign cost. The cost allocation is to spread the cost as per departmentsor inventories.Apportionment: Apportionment means to divide the cost means to share a groupexpenditure among individual streams of funding. This method is used to spread general cost ofbusiness that is salary, general overhead and operational cost. All these costs are apportioned toindividual departments to cover the cost. Cost volume profit analysis:This analysis is done to determine the changes in cost andvolume of company. This shows the effect of change in cost and profits on Carnival Corporation& Plc.the extra cost incurred on operations of the organisation are compensated by earningsufficient profits. Basically it is concerned with the volume of sale and cost of product having aneffect on profits of company.Break-even analysis: With the help of this analysis, an organisation can determine thesales or revenue that shall be earned to cover cost incurred in business. Break-even point iswhere the cost and revenue of firm is equal (Petria, Capraru,and Ihnatov, 2015.). The business isin no profit and no loss situation. The analysis is done to know the exact amount that shall beearned to cover fixed and variable cost of the business. This also states that weather there is arequirement to increase the sales revenue to cover the cost of business.Economies of scale: This means to achieve a position where production of units of aproduct is done at a large scale with a lesser input cost (Weilburg and et.al., 2017). This will bebeneficial for Carnival Corporation Plc. for achieving growth by increase in the production witha chance to incur less cost on production.Diseconomies of scale: This is a situation where additional cost is incurred for increasingthe production or going big. This is a cost disadvantage that an organisation has incurred due tothe large size of the organisation. Carnival Corporation Plc shall avoid this situation. spending alarge amount without any increase in profits is not good for the organisation.P1.2 Analysis of pricing methods used in the travel and tourism sectorThe different types of pricing methods that an organisation shall evaluate and analyseare:Cost-led: This is pricing technique in which an organisation determines the actual costincurred on the production of its units. These will help in setting up the profit margin and2
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