UNIT 2 Finance and Funding Assignment

Added on - 21 Jul 2020

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UNIT 2 FINANCE ANDFUNDING
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................11.1 Discuss significance of costs and volume in the travel business......................................11.2 Explaining pricing methods for tourism sector................................................................31.3 Factors influencing profit for travel sector.......................................................................4TASK 2............................................................................................................................................62.1 Types of management accounting information in travel business...................................62.2 Discussing use of management accounting information..................................................7TASK 3............................................................................................................................................93.1 Interpretation of financial statements...............................................................................9TASK 4.........................................................................................................................................114.1 Sources and distribution of funding for capital projects................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................14
INTRODUCTIONFinance and funding plays essential role in travel and tourism business. It is required sothat operational tasks can be achieved with much ease. The present report deals with Carnival plcwhich is engaged in providing global cruises in various nations and as such, operates business onlarge basis to satisfy travellers. While other company is Dalata Hotel Group Plc which isengaged in the hospitality sector and satisfying customers with exotic facilities to them. CVPanalysis is discussed which is much importance to travel business in estimating costs so thatdesired profit may be attained quite effectively. Various pricing methods and factors influencingprofits are also discussed in the report. Moreover, use of management accounting information inmaking enhanced decisions is explained along with computation of financial ratios. Sources offunds are discussed so that travel business may accomplish tasks in effective way.TASK 11.1 Discuss significance of costs and volume in the travel businessCost and volume are quite important for company so that it may be able to control costsin effective way and garner profits. For overcoming this problem, Cost Volume Analysis (CVP)is helpful technique which can provide accurate results. Carnival Plc which is engaged in thetravel and tourism business having ten global cruises. It is operating in various countries and assuch, it is required to arrive at break-even point so that it may not incur any loss while operatingbusiness.Various costs such as direct, indirect, fixed, variable, allocation and apportionment isrequired to be controlled in effective manner so that profits can be achieved by Carnival Plc inthe best possible way. This will help to achieve break-even point and economies of scale ineffectual way (Kumar, 2018). CVP analysis is useful for assessing cost of goods sold which aretour packages in global cruises and break-even point can be assessed with the help of thisanalysis and useful for management to take better and effective decisions with much ease. Salesvolume is required to be discover by Carnival Plc so that it may be able to concentrate on costsand as such, profits may be predicted in the best possible way. In addition to this, importance ofCVP analysis is discussed below-1.Main importance of CVP analysis is that it help management of Carnival Plc to takeeffective decision by estimating expenditures such as overheads, administrative costs are1
predicted and as such, sales are achieved in the manner which results in desired profits.Moreover, break-even analysis is also done which help to assess profitability level and assuch, costs are assessed and profit is made which helps firm to enhance and maximisevalue and as a result, expenditures are covered with much ease.2.CVP is also useful for maintaining sales volume in effective way. In relation to this,margin of safety is used which is good technique for Carnival Plc. Margin of safety isexcess of planned or actual sales over break-even volume and it provides usefulinformation to company that it could become unprofitable. Thus, sales volume ismaintained so that sales may not decrease and profit level is maintained in the bestpossible way (Bellavitis, Filatotchev, Kamuriwo and Vanacker, 2017).3.Carnival Plc is engaged in travel business and as such, it is required to control costsinvolved in packages of cruises so that profit may be maintained in effectual way.Volume of sales should be increased so that more and more services are being sold tocustomers and as a result, profit can be maximised as well.4.Contribution margin is also attained by organization which is helpful so that amount canbe deducted for variable and fixed costs and after that remaining amount is taken asprofit. Thus, sales are to be achieved up to high extent so that all costs can be coveredquite easily and Carnival Plc may be accomplish profits with much ease. Thus, CVPanalysis has immense importance for travel and tourism business to control on variouscosts and accomplish desired revenue quite easily.5.CVP analysis provide clear picture about the services sold by company and as such,management is able to take viable decisions if any deficiency is found in the products orservices sold so that profit level may be attained quite effectually. Carnival Plc is able tomaintain profit level by incurring fixed costs so that more packages of cruises may besold and profits may be achieved. Thus, it results into higher productivity and morerevenue (Gurtner, 2016).6.Targeted income may be achieved by initiating control in effectual way. Cost, volumeand profit have greater impact on profitability aspect of the company and as such, desiredprofits can be achieved with much ease. Thus, it can be said that CVP analysis is quiteuseful for business to achieve desired profits.2
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