Sample Assignment on Finance & Funding

FINANCE AND FUNDING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explaining the importance of cost and volume in financial management of travel and
tourism. .......................................................................................................................................1
1.2 Analysing the different pricing method................................................................................2
1.3 Assessing the various factors which are affecting profit for travel and tourism businesses.3
TASK 2............................................................................................................................................4
2.1 Assessing the various types of management accounting information system .....................4
2.2 Assessing the management accounting information as a decision tool. ..............................5
TASK 3 ...........................................................................................................................................5
3.1 Interpreting the financial data of the Dalata plc....................................................................5
TASK 4............................................................................................................................................9
4.1 Analyse sources and distribution of funding the development of capital projects
associated with tourism...............................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The finance and funding are the important sources to raise funds in tour and travel
industries. The finance and funding in a travel and tourism sector will be discussed in present
report in order to understand different aspects of finances. This assignment will present the
importance of cost and volume in travel and tourism sectors. The report will also provide
different rating methods and the factors affecting the pricing decision of travel and tourism
sectors. Further, report will discuss the various management accounting information and their
uses as decision-making tools. Later, assignment will provide details of various sources of funds
required for the capital project in Dalata plc.
TASK 1
1.1 Explaining the importance of cost and volume in financial management of travel and tourism.
Costs- There are different types of cost like direct, variable, indirect and fixed cost.
Volume – break even analysis, cost volume profit analysis
Direct cost – This cost is directly accountable to a cost object. This cost is directly
distributed to projects. For production of specific goods or services, direct cost is completely
assigned to the project.
Indirect cost – This cost is not accountable for object. The indirect includes security
cost, personnel, and office expenses (Collier, 2015). This is not directly related with
expenditures. Indirect cost is basically of two types, fixed cost which includes all the fixed
expenditures and variable cost which includes recurring expenses.
Fixed cost – The fixed cost is which does not change with change in output. This is the
cost which is obtained from rigid expenses (Provost and Fawcett, 2013). The fixed price cannot
be avoided at any cost during production. It includes depreciation, rent, insurance amount.
Variable cost – This is the cost which changes with change in output. Change in variable
takes place with modification in sales volume. Variable expenditure consists of cost of material,
cost of traveling expenses etc.
Break even analysis- It is a tool which helps to identify the point of production of
Carnival Corporation to recover their all developed cost. Break even analysis is that point of
production where an organization do not have any profit or loss.
Cost profit volume analysis- Changes in cost and volume effect of Carnival
corporation's operating earnings and net income is determined by the cost volume profit analysis.
1

For satisfaction of expectations of customers and their demands, business produces the
products and services which require sum total of various expenditures which is termed as cost.
For better functioning of the business every concern need to maintain cost of product and
services effectively (Otley, 2016). Cost is involvement of various types of costs which is
obtained for the execution of functions of organizations. Variable cost fixed cost direct
expenditure allocation expenditure and other overhead are different types of expenditure.
Carnival Corporation acquire costs because it provides services to customers. To make the better
decisions there are various tools and techniques.
These techniques consisted of CVP analysis, break even analysis and economies of scale
etc. In relation with the cost, volume and profit Carnival Corporation has used technique called
CVP analysis for purpose of taking decision (Nitzl, 2018). CVP analysis was very beneficial for
carnival corporation in understanding of level of sales which will later became beneficial to
generate profit.
CVP analysis is an impelling technique which aids in investigation of actual cost and
assist in reasoning of capability of Carnival Corporation (Jermias, 2017). There are lots of
advantages of utilizing CVP analysis by Carnival Corporation. And these advantages consist,
amended decision making, improved controlling, fixing prices of products and services.
1.2 Analysing the different pricing method.
Travel and tourism industries are one of the major industries which rapidly moving in
today's era. This is very essential sector which renders support to economy of country and also it
became crucial sources of generating of income. To set prices of product and services offered by
company, use of pricing method arises. There are various pricing methods which are available to
set the best price that includes profit led, value adding, market led, discounted, cost plus, return
on investment, and competition oriented to select the most appropriate method for best pricing
selections are carefully examined (Ismail and King, 2014).
Discounted pricing
To attract customers, the companies, offer discount in off season is called discounted
pricing. The Carnival corporation uses this technique at the time of off season for customers so
that they can attract the customers and earned profit.
Cost plus pricing method
2