Finance & Funding: Analyzing Cost, Volume & Profit at Carnival Corp.

This assignment provides a comprehensive analysis of finance and funding within the travel and tourism sector, focusing on Carnival Corporation and Dalata Hotel Group. It begins with an examination of the importance of cost, volume, and profit in management decision-making for Carnival Corporation, covering direct, indirect, fixed, variable, and semi-variable costs, along with pricing methods and factors affecting profitability. The assignment then transitions to a poster presentation on management accounting information and tools used by Dalton Hotel Group, followed by a management report interpreting the financial accounts of Dalata Hotel Group for two financial years. Finally, it concludes with a leaflet presentation highlighting the sources and distribution of funding in public and non-public tourism development. The report leverages financial and accounting principles to provide insights into strategic decision-making and business performance within the tourism industry.

FINANCE AND FUNDING IN TRAVEL AND TOURISM SECTOR

INTRODUCTION
The finance and funding in travel and tourism sector primarily focus on gaining the knowledge
about various aspects of financial condition and performances of the business. In the first task
of the project a written report will be made that will focus on analyzing the importance of costs,
volume and profit in the management decision making in the tourism sector for Carnival
Corporation which is a world's largest travel company having its operations in Europe, Australia
and North America.
In the second task, a poster presentation will be made highlighting the management accounting
information and tools used by Dalton Hotel Group with the help of a case study. The task 3 of
the report will be a management report that will interpret the financial accounts that will show
the performance of the Dalata Hotel group for 2 financial years. The last task of the assignment
will be based on Leaflet presentation that will highlight the sources and distribution of funding
in the public and non-public tourism development.

TASK 1 MANAGEMENT REPORT
EXECUTIVE SUMMARY
Cost, Volume and profit are the most considerable factors that are used in the tourism industry.
In fact, all the tour operating and travel companies use these factors for determining their
performance and growth rate in the business. Carnival Corporation operates in the tourism
sector and it uses the factors of cost, volume and profit in order to make strong strategies so as
to sustain the competitive market and expand its business to other nations.
INTRODUCTION
Costing is the process that measures and analyzes the costs which are associated with the
products and services offered by the company to the customers in the tourism business. Cost
accounting is essential for Carnival Corporation as it helps in decision-making processes thereby
allowing the company to calculate, monitor and evaluate its costs.
DISCUSSION
1.1 IMPORTANCE OF COST, VOLUME AND PROFIT IN MANAGEMENT DECISION
MAKING FOR CARNIVAL CORPORATION
Direct Cost
There are basically three types of cost in the tourism business first is the direct cost which is
related to the product and service for example carnival corporation & Plc have to calculate the
direct labour expenses and the cost of material, goods, accommodation costs and other
facilities provided to the customer comes under direct cost (DRURY, 2013).
Indirect Cost
The indirect cost relates to the expenses which are unrelated to the product or services.
Carnival Corporation gives salaries to its employees, cost given for rent, electricity, cost of
hospitality services given to the customers and cost related to facilities provided all contribute
to the indirect costs (DRURY, 2013).

Fixed Cost
The fixed cost does not vary with the number of goods or services that company produces. For
example, Carnival Corporation leases accommodation service from the hotel industry and it has
to pay the $2000 per month to cover the cost of the lease and that cost is considered as a fixed
cost. Some additional examples of fixed cost for Carnival Corporation include insurance
expenses; rent paid, administration cost etc. (Garrison, et al. 2010).
Variable Cost
The variable cost fluctuates at each level when the production output changes. For example the
cost of raw material used for beverage services constantly fluctuates for Carnival Corporation,
moreover the cost of bills, packaging cost; amount paid to workers for completing each unit
work, commission paid to market team members of Carnival Corporation for selling products or
services etc. (Garrison, et al. 2010)..
Semi-Variable Cost
For Carnival Corporation the semi-variable cost would include wages for overtime work or a
salary for an employee could be a fixed component but commission paid to them comes under
the variable portion. Some additional semi-variable cost includes gasoline, oil, phone bills,
electricity bills etc.
Importance of Cost for Carnival Corporation
 Helps in controlling the cost by applying standard costing and budgetary control.
Managing cost will help a company in getting reliable data and information for
comparing the cost between periods, volume output, determent and processes
(Weygandt, et al. 2010).
 It also helps in maximizing the returns on investment and helps in increasing the
business performance by reducing overhead expenses and cutting cost.

BUSINESS VOLUME
Carnival Corporation must always consider the business volume especially for the peak seasons
for strategic decision making. The business volume can be increased by paying key attention to
the supply and demand variables (Rose and Krausmann, 2013). A company can increase the
business volume by determining the demands of the customers and keeping a balance between
the supply and demand. For example, the company should use effective marketing strategies
for popularizing its products thereby increasing the demand for the product and also increase
the supply of product.
PROFIT
Profit margin is the result of increased operational performance and increased business sale of
products and services offered by Carnival Corporation (Williams and Williams, 2010). The
company can analyze its profit margin from the last year to the present year to form strategies
to cut cost in areas thereby maximizing more profit in the next year. Huge profit margins help a
business to develop its infrastructure facilities for the customers.
1.2 ANALYSING THE PRICING METHODS USED IN CARNIVAL CORPORATION USING
RELEVANT EXAMPLES
Carnival Corporation operates in the competitive environment and it is essential for the
company to use different types of pricing strategies in order to stay in the market and increase
customer attraction for its products and services. Various types of pricing strategies used by
Carnival Corporation are described below (Hague, 2018).
Cost led Pricing
In the cost-based pricing, the basis of pricing is based on manufacturing and production costs.
Carnival Corporation uses this pricing strategy by analyzing the market condition and analyzing
the price offered by the competitor companies (Hague, 2018). For example, lowering the price
of a service as capered to Competitor Company so as to attain larger customer base in the
business.

Profit Led Pricing
Profit based pricing focuses on the value of the product or service offered to the customer. The
prime purpose of using this pricing strategy is to maximize the profit. Carnival Corporation uses
this strategy by fixing the price of its prime services for the customers thereby getting huge
profit margins for the company (Hague, 2018).
Season Wise Pricing
Carnival Corporation takes into account the seasonality factor and ensures that different types
of packages are offered to the customer by varying the prices. During the festive season,
carnival Corporation offers various discounts on its products and services thus varying the price
features (Baker, 2010).
Market-Led Pricing
Carnival Corporation uses the Price skimming strategy in which the product is highly priced
during its release into the market and then is the price is lowered gradually when competition
begins to enter the market. Products priced under the price skimming strategy are perceived as
good quality product (Baker, 2010).
1.3 ANALYSING THE FACTORS WHICH AFFECT THE PROFIT FOR CARNIVAL
CORPORATION
Profit refers to the financial gains earned by business by performing operational activities. There
are many internal and external factors that affect the profit margin for Carnival Corporation and
some of these factors are described below (Williams and Williams, 2010).
INTERNAL FACTORS
Bad Debts
Bed Debt arises when the customer avails the services of Carnival Corporation but does not pay
for the services then a loss of money becomes the bad debts for the company which reduces
the profit margin for the company (Williams and Williams, 2010).

Accounting
Carnival Corporation makes decisions based on the data of the accurate financial reports. But if
the company has limited data from the annual budget, general ledger or bank statements then
it would be difficult to set optimal prices for managing the overhead and production costs which
will help Carnival Corporation in managing the adequate cash flow (Passarelli, 2012).
Capital
If the company does not have adequate cash reserves for paying bills then the company might
lose its access to the suppliers and will have to cut cost on marketing and other promotional
activities that will decrease the profit margin of the company. Hence company should have
adequate financial reserves (Adrian, et al. 2013).
People
It does not matter what policies and procedures the company is implementing in order to build
a strong organization. But the most critical internal factor that affects the profit margin of a
business is its employees. Hence it is essential for Carnival Corporation to treat its employees
with dignity and keep them motivated to achieve more growth and productivity for the business
(Adrian, et al. 2013).
Material price change
The raw material is one of the major components of the hospitality and tourism products and
services. If the cost of raw materials steadily increase than it affects the profit margin of the
company.
Labour Price Changes
Labour cost is another factor that affects the profit margin of the Carnival Corporation. Changes
mainly include a range of labour related costs, insurance changes, regulation on minimum
wages etc. (Adrian, et al. 2013).

EXTERNAL FACTORS
Seasonal variation
Profit margin increases during the festive seasons and when customer plan holidays, vacations
and trips. Business volume of Carnival Corporation is depended on seasonal variations thereby
affecting the profit margin of the company.
Political
The political stability of a country or a region also affects the profit margin for Carnival
Corporation. For example, if the political situation is stable then a company can operate easily in
the market by following the EU guidelines but if it is unstable then business will not get support
from political parties to operate business smoothly which will affect the profit margin for the
company (Ross, 2013).

Economic
The economic factors include the government policy, taxes, interest rates etc. For example, if
government frequently changes the policies and tax regulations then it decreases the interest of
customers to opt for a particular service as sometimes the services are high prices by Carnival
Corporation due to increased tax posed by the government which affects the profit margin of
the company.
Social
The disposable income of the customers affect the profit margins as people having high
disposable income are more likely to use the services offered by Carnival Corporation. But if
people have low disposable income then a company will have to lower down the price of its
services which will affect the profit margins of the company (Li and Ferreira, 2010).
Current Trends
Carnival Corporation needs to implement the new technological advancement in the business
so as to stay ahead of the competitors. The company need to change or improve the
infrastructure facilities thereby reducing the rate of obsolesce that affects the profit margin of
Carnival Corporation (Li and Ferreira, 2010).
Planning
It is highly essential that Carnival Corporation builds an effective business plan to keep track of
the right things thereby allocating time, resources and effort strategically in the business.
Business planning will also help the company in managing change related to production and
operational changes. In financial terms, cost and budget planning are important for developing
a new product or service. Example, managing Cost for training employees and the staff
members and cost of maintenance etc. (Li and Ferreira, 2010).
Staff

In most companies, the largest expense is for the employees and the staff members. The best
way to manage staff for Carnival Corporation is to cut the low performing team members from
the business and higher skilled workforce in the business thereby generating more profit for the
business (Li and Ferreira, 2010).
CONCLUSION
The above discussion concludes that the cost, profit and volume have a huge impact on the
business of Carnival Corporation. It is essential for Carnival Corporation to incorporate effective
strategies that could minimize the cost and increase profit for the company.

TASK 2 POSTER
2.1 & 2.2 MANAGEMENT ACCOUNTING INFORMATION AND DECISION MAKING
TOOL
MANAGEMENT ACCOUNTING INFORMATION
Management accounting is the combination of
financial and accounting principles used by
businesses in order to increase the value of the
company thereby delivering the value to the
shareholders.
USE OF MANAGEMENT ACCOUNTING
INFORMATION
 Management Accounting Information
helps the business of Dalata Hotel to
improve its productivity and
performance.
 The accounting information is used to
forecast the revenues of the company
and to make the budget reports.
 It also acts as an effective decision-
making tool for Dalata Hotel Group.
LEVEL OF DECISION MAKING IN ORGANIZATIONS
Operational Decisions
The decision was taken by the members of the Dalata Group at the lower
level for example workers, employees etc.
Tactical Decisions
The decision was taken by the managers of the organization at the
executive level
Strategic Decisions
The decision was taken by the higher management or by higher authorities
TYPES OF MANAGEMENT ACCOUNTING TOOL
 Budgetary Control
The company’s past database is used for preparing the future budget.
 Standard Costing
It is a standard tool that substitutes the expected cost with the actual cost
thereafter discovering the variable.
 Marginal Costing
This tool helps in estimating the change in cost which helps in
making effective decisions for the business
USE OF MANAGEMENT ACCOUNTING TOOL IN
DECISION MAKING
Helps in forecasting budgeting and
controlling
This tool helps in variance analysis,
raising capital, forecasting and helps in
decision making
CONCLUSION
The management accounting tools help in data interpretation and making a strategic decision for Dalata Hotel Group Plc.
These tools are vital for increasing the performance level and efficiency of Dalata group. (Figge and Hahn, 2013).
drivers of corporate eco-efficiency: Management accounting information for the efficient use of environmental