Level 2 Operational Management Accounting: Budgeting and Analysis

This assignment focuses on operational budgeting, presenting an operating budget for the Beech Inn, a 100-bedroom hotel, for October 2020. It calculates revenues from room sales and food & beverage, then subtracts various fixed and variable operating expenses to arrive at a gross loss. Furthermore, the assignment explains zero-based budgeting, a budgetary management technique that segregates expenses into different categories, emphasizing its significance in complex economic situations. It highlights the technique's detailed nature, strategic advantage in cost control, and situational adaptability, making it particularly useful during economic turbulence for identifying and controlling costs to maximize profits. The assignment concludes that zero-based budgeting is a valuable tool for analyzing and managing costs, especially during challenging economic times.

LEVEL 2 UNIT 6

Table of Contents
INTRODUCTION...........................................................................................................................3
Part A...............................................................................................................................................3
Part B...............................................................................................................................................4
Zero based budgeting...................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
This project will discuss the projection of the operating budgeting. Further the emphasis
will be given over the significance of using zero based budgeting technique in complex
economic situation.
Part A
Operating budget
Sales
Room sales (100 rooms * £130 * 31 days * 70%) 282100
F&B Sales ( £13 * 100 * 31) 40300
Less:
Room operating expenses
Variable 32550
Fixed 60000
Food and beverage operating expenses
Variable 12694.5
Fixed 1000
Other Fixed operating expenses
Administration & general 3000
Sales & marketing 2500
Property operation & maintenance 2000
Information and telecommunication 3000
Other variable operating expenses
Administration & general 157492.4
Sales & marketing 157492.4
Property operation & maintenance 78746.2
Information and telecommunication 0
Gross loss -188075.5

Part B
Zero based budgeting
Zero based budgeting is a technique of budgetary management that involve segregation
of all different expenses associated with the respective financial year in the different categorises.
This is a very famous budgetary management technique that is used by companies to represent
all different expenses occur in the respective financial year in different categories (Kusumasari,
2018). This is a very basic form of budgetary analysis that is used by the companies to represent
all different expenses occur by the business venture in the respective financial year. This is
among the core budgeting practice sue by the different business houses in order to execute the
operational activities by the venture. Zero based budgeting is a significant process or approach
that is undertaken by the different business houses to execute the operational practices adopted
by the venture. This technique of budgeting align with the fact that what all individual it offer to
the venture at the individual level along with the business objective. This technique do not give
emphasis to the different cost centres associated with the venture. This is an important for the
organisation to identify the various cost centre that occur all differing cost of the company and in
case of the zero based budgeting technique there is not any specific focus is given over the
individual cost centre associated with the venture. This technique contain one core weakness is
that it is considered as a complex practice related to the management of cost at the organisation
level. This technique is majorly based on the expected profitability occur by the venture at the
organisation level. This can be considered as a technique that play role in maximisation of the
profits of the business venture. As the only focus of the management is to maximise the profits of
the company hence this technique is wisely support the evbtj6er to control the cost in the
operation and achieve the key objective of the profit maximisation in the business unit.
One of the core reason behind companies prefer to use this technique of budgeting is that
this is very detailed. This technique p[resent and segregate each individual cost into different
categories on the basis of the nature of the individual cost in order to present all the cost in the
most presentable manner. This technique of budgeting allow the venture to represent all types of
the cost in the most detailed manner and the most comprehensive manner as compare to other
technique of budgeting in the business records (Loizou and et.al., 2019). The basic reason why
this method of budget is considered as more preferable for the venture is that this is also very
strategic technique of budgeting that is used by the venture. It is important for the organisation to

adopt this technique and also formulate and develop different strategies related to the cost
control. As each individual expenses seen under this technique is very detailed in nature so the
organisation and management get the sufficient opportunities to cut the overall cost of the
operations. Hence the detailed nature of the budgeting process adopted by the venture it can be
stated that this technique is very strategic in nature and allow the venture to maximise the profits
in the respective target market.
The basic nature of the technique of zero based budgeting is such that this is very
situational;. This technique allow the venture to present the cost figure and record on the basis of
each individual situation in the venture. The role of the zero based budgeting technique is such
that the cost presentation is done in this method is based on each individual situation in the
venture (Moser, Haering and Yalla, 2021). The role of the zero based budgeting technique is
such that it incorporate with segregating each individual cost in the all different operation and
functional areas associated with the venture.
In context to the time of economic turbulence this can be stated that the use of zero based
budgeting practice is ore preferable approach for the business houses. This is supported by the
professional that the role of zero based budgeting become very significant in context to the
complex situation. In the time of the economic turbulence this technique is well suitable as it will
present all different areas that is seeking extra cost to deliver the same operation (Savard and
et.al., 2019). Further this technique play effective role in controlling the overall cost as it is
presented in detail manner all different cost associated with the venture that can be controlled in
the time of economic turbulence. In such a time the major focus is given over controlling the
total cost of the orations of the venture. Zero based budgeting is a well suitable method in the
time of economic turbulence or complex economic situation associated with the business
venture. Henceforth it is supported with the fact that the role of zero based budgeting practice at
the time of the economic turbulence is more favourable for the professional. Economic
turbulence require the proper estimation of the budgeted cost and total estimated profit that will
incurred in against of delivering the business operations. The economic turbulence further
empower the business to precisely utilise this zero based budgeting practice as it would empower
the stakeholder to conduct the right estimation.

CONCLUSION
The zero based budgeting technique can be used in the situation of economic turbulence.
This technique is detailed that allow the venture to easily analysis the all different cost that is
incurred at all different operations of company. This technique is derailed which favour the
venture to control the total cost of operations.
REFERENCES
Books and Journal
Kusumasari, L., 2018. Functions, Age, Education, Tenure of CEO, and Employee Commitment
Toward Firm Performance. KnE Social Sciences.
Loizou, E. and et.al., 2019. The role of agriculture as a development tool for a regional
economy. Agricultural Systems. 173. pp.482-490.
Moser, R. D., Haering, S. W. and Yalla, G. R., 2021. Statistical properties of subgrid-scale
turbulence models. Annual Review of Fluid Mechanics. 53. pp.255-286.
Savard, B. and et.al., 2019. Regimes of premixed turbulent spontaneous ignition and deflagration
under gas-turbine reheat combustion conditions. Combustion and Flame. 208. pp.402-
419.