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Unit 2: Finance and Funding in the Travel and Tourism Sector

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Added on  2020-02-14

Unit 2: Finance and Funding in the Travel and Tourism Sector

   Added on 2020-02-14

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UNIT 2: FINANCE AND FUNDING IN THETRAVEL AND TOURISM SECTOR
Unit 2: Finance and Funding in the Travel and Tourism Sector_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A) Concept of CVP analysis and its importance (P1.1).........................................................1B) Analysis of pricing methods (P1.2)...................................................................................2C) Factorial analysis (P1.3)....................................................................................................3TASK 2............................................................................................................................................4A) Types of management accounting information (P2.1)......................................................4B) Investment appraisal techniques (P2.2).............................................................................5TASK 3............................................................................................................................................6A) Interpretation of financial statements (P3.1).....................................................................6TASK 4............................................................................................................................................7A) Sources of funding (P4.1)..................................................................................................7CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10APPENDIX....................................................................................................................................11
Unit 2: Finance and Funding in the Travel and Tourism Sector_2
INTRODUCTIONTravel and tourism management [TTM] is a crucial part for every country in which manytype of services are provided to tourist. It is a holiday activity by which people go for therelaxation with their family (Travel & Tourism, 2016). Tourism and travel are two different thingwhere travel is simply a movement on which people go for journey by any transport such astrain, bicycle, and airlines and so on.In this report The Carib happy Tours Company is a private entity who deals in thesummer holiday packages and different services. In which it’s provide a private charter only fortheir tourist guest and company also focuses on accommodation which arranged in hotel andaeroplane for customers comfortability. CHTC charge £800 per tourist and total cost foraccommodation for 2 weeks is £60,000. I n addition CHTC evaluate CVP importance in decisionmaking process related to the travel-tourism. In this management accounting, financialaccounting is considered in context of TTM. Moreover in these report proper analysing thesource of funds that will be assists for the development in TT sector.TASK 1A) Concept of CVP analysis and its importance (P1.1)Cost volume profit analysis is a proper analysis in which variable cost, fixed cost, sellingprice, volume of sale are evaluated. It is also assists for determining net income and operatingincome. For systematic analysis various assumptions can be perform such as productionmanagement, fixed and variable cost are constant or not and many more (Goodall and Ashworth,2013). In travel and tourism sector, CHTC evaluate importance of cost and volume and they areas follows:Contribution Margin: It is a margin percentage in which contribution is divided by the sales sothat percentage will be find out. CHTC use this term to find out the contribution margin in theirholiday packages. For these following formula is used to find out the percentage.CHTC company total sale is 1 lac and its margin is 40000. so that CM ratio is CM ratio = contribution margin / salesCM ratio = 100000 /40000= 40%1
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CHTC Company has adopted 40% margin in their holiday packages. It will assists for the setmargins and also its effectiveness in total sales.MOS: MOS is stand for margin of safety and this is used in a travel-tourism sector to computetotal amount of sale after excluding break even sales. It will assists for set high margin so thatthere is a low risk in the tourism sector. In other words it is also a forecasting which expressedsafety margin for better sale in future.Break even analysis: It is often called sale mix in which total selling part are evaluated. CHTChas many holiday packages and all having different margins so that Company can use sale mix inthe calculation of total selling (Becker, 2016). BEP manage the balance between profit and lossand compute a point where no profit and loss is there. All above points are playing veryimportant role in travel and tourism sector for better consideration of budgets and so on.B) Analysis of pricing methods (P1.2) CHTC has adopted pricing methods for systematic analysing in context of travel andtourism. CHTC has mainly three choice to select their pricing method which are based on cost,demand and competition. There are various pricing methods which are discussed below:Cost based pricing: In these method some of the percentage is added in the cost price to set thefinal price. In other word it is a selling price in which profit margin is included so that it’s oftencalled cost plus pricing. CHTC has adopted this method for set their packages pricing (Hall,Timothy and Duval, 2012). It will assists for gathering the minimum information and calculatethe price in a simple terms.Demand based pricing: In these price is deciding according to the tourist’s demand in whichCHTC has used high price if demand of product is more in the market. On the other hand ifdemand is low so there is a deduction in the price. This strategies are helpful for attracting touristtowards the products (Xiang, Magnini and Fesenmaier, 2015). It is based on a market analysis inthis evaluation of demand is helpful in the reaching success. When CHTC has low demand, atthat time they deduct the all prices to cover the loses and obtain more capital if customer happilyaccept the all changes.Competition based pricing: Prices are to be formulated in a strategy so that competition cannotovertake company's market share. This process in which prices are formulated with regards tocompetition is called competition based pricing. CHTC use different prices such as low, high andequal according to the other competitions.2
Unit 2: Finance and Funding in the Travel and Tourism Sector_4

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