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# Hospitality financial Management PDF

Added on - 07 Oct 2021

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HOSPITALITY FINANCIAL MANAGEMENT
Question 1
Part A
Current Sales Revenue : \$650,000
Cost of Beverage = 40% of 650,000= \$260,000.
Other Variable Cost = 10% of 650,000= \$65,000
Total Variable Cost= \$260,000+ \$65,000= \$325,000
Contribution= Current Sales- Total Variable Cost
=\$650,000-\$325,000= \$325,000
Fixed Cost=\$170,000
Profit Before Tax=Contribution-Fixed Cost= \$325,000-\$170,000=\$155,000
PART B
Increase in Fixed Cost= \$12000
New Fixed Cost= \$170,000 + \$12,000= \$182,000
Profit Before Tax required= \$155,000
Contribution= New Fixed Cost+ Profit Before Tax= \$182,000 + \$155,000= \$337,000
Variable Cost= 50% of Current sales or 100% of Contribution
New Current Sales= Variable Cost + Contribution= \$337,000+ \$337,000=\$ 674,000
PART C
Sub Part 1
% Increase in Menu Price = 5%
Existing Revenue= \$650,000
New Revenue= \$650,000*1.05= \$682,500
Sub Part 2
Total Variable Cost= \$ 325,000 (Computed in Part A)
New Revenue= \$ 682,500
Variable Cost % of Revenue = Total Variable Cost/ New Revenue= 325000/682500 = 47.62%
Beverage Cost= \$ 260,000
New Revenue= \$ 682,500
Variable Cost % of Revenue = Variable Cost/ New Revenue= 260000/682500 = 38.09%  