Finance and Funding in the Travel & Tourism Sector - Cost and Volume

Added on - 12 Nov 2020

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FINANCE AND FUNDING INTHE TRAVEL AND TOURISMSECTOR
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1b Explaining the significance of the cost and the volume in the financial management oftourism sector..............................................................................................................................1b.ii Calculation of volume of customers for trust to make target surplus of £3000 per month.2c Analysing various pricing methods that are used in the travel sector......................................2d Analysing the factors that influence profits for the travel and the tourism business...............3e Different types of management accounting informations which helps for financial decisionmaking in Local Wildlife trust...................................................................................................4f. Management accounting information as financial decision making tool................................4TASK 2............................................................................................................................................5SECTION A................................................................................................................................5The British Museum....................................................................................................................5SECTION B................................................................................................................................6Sources of funding available to Local Wildlife Trust is as follows:................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................9
INTRODUCTIONFinance is considered as basic need of business which helps to perform regular activities.In the present era, there are numerous sources which helps to attain sufficient level of finance forboth long and short term perspective. The present report will give basic understanding offinancial practices and systems which would assist with management decision making in traveland tourism business. It will reflect significance of cost consideration with reference to LocalWildlife trust. This will articulate about numerous pricing methods and factors impacting profitand types of management accounting information as well. Moreover, it will be implied infinancial decision making in Local Wildlife trust.b. feasibility studyb. i Explaining the significance of the cost and the volume in the financial management oftourism sector.Cost volume analysis is the tool that studies the relationship between among the volume,prices, profits and cost. It is the integral part of profit planning of travel sector. It acts as theuseful tool of the financial management of tourism industry as it provides deeper insightstowards the effects and the inter-relationship that is present in the factors. All future needs areplanned and analysed in the effective manner in the travel and the tourism industry. Cost andvolume analysis helps in making correct and the appropriate decisions so that the chances of theloss reduce (Camilleri, 2018). Eachcost must be considered for purpose of undertaking financialmanagement decisions which are stated below:There are numerous costs like direct cost, fixed cost, variable cost and indirect cost asdirect cost is considered as paid to purchase direct material, expenses and labour. It is costswhich is associated with unit. On the contrary, indirect cost is not directly related with singleunit. It is also replicated as overheads. The fixed cost is paid with level of activity as its cost innot changed for every level of activity. In this aspect, fixed cost is to run the trust is £5,000 permonth of Local Wildlife trust.The variable cost gets raise with level of activity and change in sales volume witheffective alteration is noted down within variable cost. There is consideration of variable cost as£8 per tourist. Break even analysis is used with objective to identify that point where LocalWildlife trust for recovering all incurred cost and to earn adequate level of profits. It is highlyeffective in order to determine cost to meet out expenses.1
Break-Even analysisParticularsFormulaFiguresChangeSelling price per ticket1212Variable cost per unit (trust cost pertourist)810Contribution per unitSelling price per unit -variable cost per unit42Fixed cost50005000BEP (in units)Fixed cost / contribution perunit12502500BEP (in value or monetary terms)BEP (in units) * selling priceper unit1500030000b.ii Calculation of volume of customers for trust to make target surplus of £3000 per monthUnits need to sell for attaining desired profit marginParticularsFormulaFiguresFixed cost or expenses5000Desired profit3000Contribution per unit4Number of units required to sellFixed cost + desired profit margin/ contribution per unit2000c Analysing various pricing methods that are used in the travel sector.In the present scenario, pricing method helps in utilising for setting price for numerousproducts which get paid through customers with high ease and organization for attaining2
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