Cost and Budgeting in Hospitality

Finance in Hospitality
TASK 2 and 3

• College
• Name
• ID
• Module
• Teacher

INTRODUCTION
In the hospitality sector, effective financial
management is required for attaining goals and
objectives.
 This presentation will highlight the elements of
cost and manner in which it aid in pricing decision.
 Besides this, PPT will also provide deeper
understanding about the aspects of budgeting and
budgetary control.

2.1
Cost implies for the value of money that has been used by the business entity to produce or
deliver services to the customers. Hence, it is sum of the all the expenditures, such as direct
and indirect, which is incurred by the firm for the purpose of production.
Elements of Cost
• Material
• Labour
• Overhead
3 Elements
• Direct cost: It is also known as a prime cost which is directly attributable to the production
activities. Material and labour are the main examples of direct cost which is associated
with the production of goods or services.
• Material:
• Labour:
• Indirect cost: In order to carry out business activities more effectually firm has to incur
some expenses which are not directly attributable to production. Examples of indirect cost
are enumerated below:
• Business and administration: Insurance, depreciation etc.
• Selling and distribution: Packaging, advertising etc.