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The Impact of Pricing Methods on the Profit of EUROCARIB

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Added on  2020-10-22

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5 M2 How variance analysis helps in improving performance of company 6 P2.2 Use of investment appraisal technique as decision making tool 6 TASK 38 P 3.1 Financial statement of travel and tourism company 8 M3 Appropriate approaches to management 8 D2. Collect and analyse the financial statement of company.9 D3 Critical analysis in whether company is financially stable or not in long term9 TASK 49 4.1 Various sources of distribution of funding for development of new hotel 9 CONCLUSION 11 REFERENCES 12 APPEND

The Impact of Pricing Methods on the Profit of EUROCARIB

   Added on 2020-10-22

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Finance and Funding inthe Travel and TourismSector
The Impact of Pricing Methods on the Profit of EUROCARIB_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1.1 Cost Volume Profit analysis and its significance in financial management of tour andtravel............................................................................................................................................1P1.2 Pricing methods that can be used by EUROCARIB to determine price charges................2M1 Analysis of different pricing methods...................................................................................4P1.3 Factors which will make impact on the profit of EUROCARIB.........................................4D1 Desired profits........................................................................................................................5TASK 2............................................................................................................................................5P 2.1. Different types of management accounting information...................................................5M2 How variance analysis helps in improving performance of company..................................6P2.2 Use of investment appraisal technique as decision making tool.........................................6TASK 3............................................................................................................................................8P 3.1 Financial statement of travel and tourism company...........................................................8M3 Appropriate approaches to management...............................................................................8D2. Collect and analyse the financial statement of company......................................................9D3 Critical analysis in whether company is financially stable or not in long term.....................9TASK 4............................................................................................................................................94.1 Various sources of distribution of funding for development of new hotel............................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................12APPENDIX....................................................................................................................................13
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INTRODUCTIONFinancing refers to a process which provides the financial resources to business in orderto perform business activities, purchasing and making investment. To better understand thisconcept in context of travel and tourism company, EUROCARIB TOURS is being selected. Thisis a London based European tour operator which focus on Caribbean holidays. In this presentcase, EUROCARIB is planning a summer holiday trip to a Caribbean Holiday Resort for onemonth. So for this, concept of CVP analysis and its importance in travel tourism business isbeing explained in this report. The pricing which can be used by company in order to determineprice is also explained in this project. As there are various management accounting informationand investment appraisal techniques which can be applied by company to improve itsperformance is also explained in project. Apart from this, internal and external sources anddistribution of funding for new hotel development has also been explained in this report.TASK 1P1.1 Cost Volume Profit analysis and its significance in financial management of tour and travelCost Volume Profit (CVP):Cost volume profit analysis is practice of cost accounting which shows the behaviour ofprofits with regards to change in cost and volume. With help of this analysis, EUROCARIBcome to know effect of cost and volume on the profits. This analysis allows managers todetermine breakeven point for various sales volumes and cost structures. The breakeven point isa situation where company have no profit and no loss. In the financial context, CVP is number ofunits of sales required to achieve a targeted operating income. There are several assumption isbeing made by CVP that is sales price, fixed cost and variable costs per unit remain constant.The breakeven point can be understood by taking an example:ParticularCostSales price: $15Variable Cost: $10Fixed cost : $50000 per annumContribution: Sales – Variable Cost= 15 – 101
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= $5BEP: Fixed Cost / Contribution margin= 50000 / 5 = 10000To get BEP the company have to sell their plan to 10000 tourists in a year. Then there will be noloss and no profit for EUROCARIB. As this company can attain to its BEP point in case theyattain a total sale of 800000 during the period of time.BEVSales 800000Fixed cost 120000Contribution 600000BEP0.2Sales Contribution BEP0100000200000300000400000500000600000700000800000900000BEP Analysis Column H Column HImportance of Cost Volume Profit:The analysis is very useful for management as this gives details about effect and interrelationship of factors that make impact on probability of business. As at initial in profit planningthis assist managers to ascertain the maximum sales volumes in order to minimise or avoidlosses. And it provides the sales volume at which company's profit goals will be achieved. In thedynamic management, the EUROCARIB use CVP analysis in order to analysis the execution oftheir short run decisions regarding fixed cost, sales volume and marginal costs (Beeton, 2016).2
The Impact of Pricing Methods on the Profit of EUROCARIB_4

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