Finance and Funding in Travel and Tourism - Akaglo Tours Company
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Added on 2020-06-04
Finance and Funding in Travel and Tourism - Akaglo Tours Company
Added on 2020-06-04
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Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1: Significance of cost and volume in financial management of travel and tourism...............11.2: Pricing methods used in travel and tourism sector..............................................................31.3: Factors influencing profit for travel and tourism.................................................................4TASK 2............................................................................................................................................52.1: Various types of management accounting information.......................................................52.2: Management accounting information as a decision making tool.........................................6TASK 3............................................................................................................................................73.1: Financial statement of Travel and Tourism sector...............................................................7TASK 4..........................................................................................................................................104.1: Sources and distribution of funding for growth of capital projects associated with tourism...................................................................................................................................................10CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................12
INTRODUCTIONTravel and Tourism sector is one of the fast growing sector in the world which givesmaximum support to the economy of the country through regarding large number ofemployment opportunities and increases income of the government. Therefore receivedmaximum support by the government and private companies. It motivates countries as well todevelop their valuable destinations and tourism sites in order to attract maximum number ofvisitors. The present assignment is based on the Akaglo Tours Company (ATC) which deals inoffering cruise yacht to the tourist in order to reach their desired destinations is selected for thepurpose of preparing this report. The project includes the various pricing methods which is usedby travel and tourism companies. Different types of management information and several factorswhich influences profit of travel and tourism business is also covered under this report (Chio,2014).TASK 11.1: Significance of cost and volume in financial management of travel and tourismAkaglo Tours Company (ATC) is a trip organiser who provides all services to thetravellers that they want from the beginning of the trip to the end of trip such as providing cruiseyacht in order to help customers to reach it their desired destination as well as also provideaccommodation facilities for tourists. Therefore, there are various cost the company had incurredin providing sufficient services to the tourists. Such cost has been discussed under the following:Direct cost: It refers to such cost which directly incurred in producing quality productsand services. It can be also considered as variable cost if such cost is inconsistent and changesamounts often. Labour cost, Raw Materials cost are few examples pf direct cost.Indirect cost: It refers to such cost which is used to execute different activities but cannotassigned to specific cost objects. Such costs are stable for a wide range of production and aregrouped under fixed cost. Salary paid to workers, rent expenses are some few examples ofindirect costs (Choi and Turk, 2011).Variable cost: It refers to such cost which changes according to the production of goodsand services the company offered. Such cost rises with the increases in production and reducewith the falls in the total output. Raw materials, packaging are few example of variable cost.1
Fixed cost: It refers to such cost which are not changes with the changes in level ofoutput thus not depend on the production level. Insurance, loan payment are the few examples offixed costs.Allocation and Apportionment: It refers to the process of allocating cost to differentdepartment on the basis of their needs and requirements so as to achieve profitable result inreturn. Therefore, the management if fails to recognise departmental needs then it may difficultfor them to allocate cost on suitable basis.Break-even analysis: It is the situation where the company earn either no profit or noloss. Such analysis help company in determining what amount of products to be sell in order tocover cost of doing business. Such analysis report can be generated on monthly, quarterly andyearly basis (Evans, Stonehouse and Campbell, 2012).Economise of scale: It refers to the company receiving cost advanced through expandingtheir production level. Increasing the level of output produced will reducing the per unit fixedcost. It will also decreases average variable cost due to increase in output. The main objective ofATC is to expand their business activities in order to reduce its per unit of cost.Diseconomies of scale: It refers to the situation where the company as well asgovernment accrue due to expansion of business operations. As if ATC expand its businessoperations then it will faces specific diseconomies of scale which includes lack of coordinationand communication between the members working in company. ATC increases its businessoperation due to which they need huge workforce thus it becomes difficult for management ofcompany in more effectively manner.Importance of cost in the financial management of travel and tourism businessDecision making: Cost factor are considered while making an effective decision oncapital budgeting in order to get maximum return in future.Improving management performance: It helps in enhancing the financial managementperformance as allocation of cost to particular project is not easy task.Designing financial structure: The business have developed and designed financialstructure on the basis of tourism activities that will be performed in near future and cost incurredin executing such activities.2
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