Managing Financial Resources: Fixed and Variable Components, Budgeting and Forecasting, Performance Measurement in Hospitality Industry

Managing Financial
Resources

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................3
SECTION A.....................................................................................................................................3
Question 2....................................................................................................................................3
SECTION B.....................................................................................................................................5
Question 4....................................................................................................................................5
Question 5....................................................................................................................................8
REFERENCES..............................................................................................................................11

MAIN BODY
SECTION A
Question 2
A)
For the Cleveland Recreation centre following that is an event committee has the fixed
components which can be explained with the help of the following table.
Fixed Components
Particulars Amount
Ballroom rental 2900
Entertainment 4500
Printing fixed 600
Decorations fixed 700
Total Fixed Cost 8700
The reason for including the following expenses as the fixed components is that they are
fixed and the organization has to pay these expenses even if it is making zero profit out of the
business practices. Thus, meaning that even if the committee had to serve 0 people at the event
still these expenses are to be bearded by the organization. The total of these components
calculated the total fixed cost. Fixed Cost : This term in accounting refers to the cost which
does not change with the variance in the increase of goods or services. These expenses are to be
paid by the organization despite its business activities (Tabbush, 2018).
Variable Components
Particulars Amount
Variable per guest printing 9
Variable per guest food 29
Variable per guest Decorations 5

Total Fixed Cost 43
It can be said that the inclusion of the variable components in the above calculation is
about the those expenditures which are known for the not being fixed and can change depending
on the number of guests the organization has. Variable Cost : This is the cost which is
incorporated with the changes in the proportion depending on the production and sales of the
organization (Panggabean and Wibowo, 2019). It can be considered to increase and decrease
according to the company's production or sales volume. Variable cost itself also rises or falls
when the production increases or decreases respectively. The total fixed cost here presents on 1
guest appearance at the event.
B)
Number of guests when are going to get increased to 3000 it will change and the variable
expenses which the business will have to spend on these guest.
Ballroom rental – This is an expense which is on the premise where the event will be held thus,
there won't be any change in this cost as it is fixed and won't be affected from any increase or
decrease in the number of guests.
Entertainment expenses – Expenses which are done by this event organizing company for
entertainment is also fixed as despite the number of guest visiting, it won't have any changes
Thus, it will remain the same at £4500.
Printing expenses – These expenses are of both kind because there will be the installation
charges of the printing equipment which will be considered as the fixed and other than that
depending on the number of guest (Andrychowicz, 2021).
Food Expenses- Food expenditure is directly linked with the number of guest which have visited
the event thus, it can be considered to be a variable expense for the organization.
Decorations and favours – These expenses are also partial in nature as half of this is variable and
half of it is fixed. Thus, it will be changing depending on the number of guests however, the
fixed expense of £700 will not be affected.
From the following table the calculation of the event committed profit has been computed
when it has 3000 guest and the charge of each guests is £100,
Particulars Amount