SITXFIN004 Prepare and Monitor Budgets: Hotel Futura Analysis

This report provides a detailed analysis of Hotel Futura's budgeting process, including a budget forecast for 2017, food and beverage budget analysis, and room service/mini-bar budget assessments. Task 1 outlines the revenue and expense forecasts with explanations for variances from the previous year, such as reduced room availability due to renovations and increased staff costs. Task 2 presents a budget forecast sheet for the Futura Restaurant and Bar, detailing customer numbers, average spending, and revenue projections across several months. Task 3 explores variance analysis, reasons for unfavorable revenue, and the impact of external factors like customer sentiment and competitor actions. The report also addresses inventory management, cash flow issues affecting kitchen costs, and the importance of involving relevant managers in decision-making. The report concludes with recommendations for improving inventory control, forecasting, and reporting for better financial planning. Desklib offers a wide range of similar documents to aid students in their studies.

Running head: BUDGETING
Budgeting
Name of the student
Name of the university
Student ID
Author note

1BUDGETING
Table of Contents
Task 1.........................................................................................................................................2
Task 2.........................................................................................................................................2
Task 3.........................................................................................................................................2
Scenario 1...............................................................................................................................2
Scenario 2...............................................................................................................................3
Scenario 3...............................................................................................................................4
Reference....................................................................................................................................6

2BUDGETING
Task 1
Hotel Futura Budget Forecast
Total Revenue
2016
$
129,59,085.
46
$
-
Forecaste
d 2017
Total
expenses
$
60,79,149.7
0
Room Budget Forecast
$
Forecast
%
Expenses Analysis
Rooms Available 61320 96% COGS $
11,03,760.0
0
15
%
Rooms Occupied 49056 Staff
costs
$
14,71,680.0
0
20
%
Total Occupancy
%
80.00 80.70% Other
Expenses
$
5,88,672.00
8%
Revenue Per
Available Room
$
150.00
Total
Expenses
$
31,64,112.0
0
Total Room
Revenue
$
73,58,400.0
0
Total Catering
Revenue
$
56,00,685.4

3BUDGETING
6
Food Budget
(Restaurants)
Expenses Analysis
Total Revenue $
23,02,728.0
7
COGS
Food Revenue $
20,01,129.7
3
86.90% Staff
costs
$
10,13,200.3
5
44
%
Beverage Revenue $
3,01,598.34
13.10% Other
Expenses
$
1,61,190.96
7%
Total
Expenses
$
11,74,391.3
2
Banquet Budget Expenses Analysis
Total Revenue $
23,21,539.4
5
COGS $
6,03,600.26
26
%
Food Revenue $
20,00,000.0
0
86.15% Staff
costs
$
4,41,092.50
19
%
Beverage Revenue $
3,21,539.45
13.85% Other
Expenses
$
3,25,015.52
14
%
Total
expenses
$
13,69,708.2

4BUDGETING
8
Room Service
Budget
Expenses Analysis
Total Revenue $
3,86,166.14
COGS
Food Revenue $
3,86,166.14
100.00
%
Staff
costs
$
1,31,296.49
Beverage Revenue 0.00% Other
Expenses
Other Revenue 0.00% Total
expenses
$
1,31,296.49
Mini Bar Budget Expenses Analysis
Total Revenue $
1,46,471.02
COGS
Beverage
Revenue / Minibar
$
1,46,471.02
100% Staff
costs
Other Revenue $
-
Other
Expenses
Total
expenses
$
-
Bar Budget Expenses Analysis
Total Revenue $
4,43,780.79
COGS
Food Revenue $
83,989.85
18.93% Staff
costs
$
1,59,761.08
36
%
Beverage Revenue $ 81.07% Other $ 18

5BUDGETING
3,59,790.94 Expenses 79,880.54 %
Total
expenses
$
2,39,641.62
There was a variance with the last year budget as the available rooms were reduced to
96% owing to renovations. Further, the occupancy rates adjusted to 80%. The variance
further caused due to increase of revenue to 15% of the total room revenue. Further, the staff
costs enhanced to 20% of the total room revenue for allowing the increase in superannuation
and awards. Moreover, the other expenses were increased to 8% of the total room revenue for
covering up the price rise in electricity.
Task 2
Budget Forecast Sheet Futura Restaurant and Bar
Turnover
Custome
r
numbers
Average
Spend
(Food) Food Revenue
Average
Spend
(Beverage)
Beverage
Revenue Total
January 1850
$
45.00 $
83,250.00
$
9.70 $
17,945.00
$
1,01,195.00
February 2000
$
37.00 $
74,000.00
$
9.70 $
19,400.00
$
93,400.00
March 700
$
42.00 $
29,400.00
$
9.70 $
6,790.00
$
36,190.00
April 1200
$
48.00 $
57,600.00
$
9.70 $
11,640.00
$
69,240.00
May 1200
$
36.50 $
43,800.00
$
9.70 $
11,640.00
$
55,440.00
June 600
$
35.00 $
21,000.00
$
9.70 $
5,820.00
$
26,820.00
July 950
$
34.00 $
32,300.00
$
9.70 $
9,215.00
$
41,515.00
August 800
$
38.00 $
30,400.00
$
9.70 $
7,760.00
$
38,160.00
Septembe
r 900
$
29.00 $
26,100.00
$
9.70 $
8,730.00
$
34,830.00
October 650 $ $
19,175.00 $ $
6,305.00
$
25,480.00

6BUDGETING
29.50 9.70
November 980
$
35.50 $
34,790.00
$
9.70 $
9,506.00
$
44,296.00
December 2200
$
48.00 $
1,05,600.00
$
9.70 $
21,340.00
$
1,26,940.00
Crosscheck
$
6,93,506.00
Total 14030
$
5,57,415.00
$
1,36,091.00
Profit Overheads
COGS - Food &
Beverage Staff Costs Other Overheads
$ 10,119.50 $ 91,075.50 $ 32,382.40 $ 31,370.45 $ 27,322.65
$ 9,340.00 $ 84,060.00 $ 29,888.00 $ 28,954.00 $ 25,218.00
$ 3,619.00 $ 32,571.00 $ 11,580.80 $ 12,666.50 $ 8,323.70
$ 6,924.00 $ 62,316.00 $ 22,156.80 $ 21,464.40 $ 18,694.80
$ 5,544.00 $ 49,896.00 $ 17,740.80 $ 17,186.40 $ 14,968.80
$ 2,682.00 $ 24,138.00 $ 8,582.40 $ 9,387.00 $ 6,168.60
$ 4,151.50 $ 37,363.50 $ 13,284.80 $ 14,530.25 $ 9,548.45
$ 3,816.00 $ 34,344.00 $ 12,211.20 $ 13,356.00 $ 8,776.80
$ 3,483.00 $ 31,347.00 $ 11,145.60 $ 12,190.50 $ 8,010.90
$ 2,548.00 $ 22,932.00 $ 8,153.60 $ 8,918.00 $ 5,860.40
$ 4,429.60 $ 39,866.40 $ 14,174.72 $ 15,503.60 $ 10,188.08
$ 12,694.00 $ 1,14,246.00 $ 40,620.80 $ 39,351.40 $ 34,273.80
$ 69,350.60 $ 6,24,155.40 $ 2,21,921.92 $ 2,14,986.86 $ 1,87,246.62
Crosscheck
Task 3
Scenario 1
The purpose of the budget preparation is analysing the variances with actual expenses
and revenues and evaluating the reason behind the variation. Hence, to find out the variance
the operational areas of the hotel must be investigated. Further, the periodic results shall be
compared with the previous year’s result and the budgeted expenses and incomes (Hashim
and Piatti 2016). Various reasons and investigation areas for the variances are as follows –

7BUDGETING
 Number of customers – the unfavourable variance was due to the reduction in the
number of customers as room availability was reduced due to renovation. Further,
another reason of reduction in number of customers was likelihood of availing the
same quality of rooms and services with lower prices. Another reason behind
customer number reduction was unfavourable seasonal changes. Apart from that the
marketing campaign carried out by the company may not have been effective to the
level expected (Finkler et al. 2016).
 Food and beverage revenue – reason behind unfavourable food and beverage revenue
was due to the optimistic nature of the company while preparing the budget. Further,
the customers may have got negative feedback from the media regarding the hotel’s
food quality.
 Cost of raw materials – the coat of raw materials required for the food items and
beverages may have been increased more than the budgeted costs.
 Wrong assumption – the accountant and the people associated with preparing budget
may have made the assumptions on the basis of optimistic data. Further, the budget
may have been prepared aggressively that was not practically possible to achieve.
 Market research – while making the marketing campaign the marketing research
basis on which the campaign was carried out was not efficient (Malhotra et al. 2017).
Scenario 2
External factors contributing to opposite trend are as follows –
 Customer sentiment – with the fluctuation in the economy, sentiments of the
consumers change regarding purchasing of the products. For instance, in case of
economic boom the consumer’s purchasing power will enhanced and they will be
interested in purchasing the goods. For determining this inflation rate of the country
can be analysed.

8BUDGETING
 Disposable income - through tracking fall and rise of amount available with the
consumers after meeting all the expenses like paying bills, daily household expenses
and expenses they will be able to determine how much they are left with for
purchasing other things or spending on hotels. Apart from their sentiment, amount
remained with them for spending is an important factor for determining the demand
(Zinovieva et al. 2016).
 Weather – if people are in the position to control the weather, hotels and resorts will
exactly know the time when the rooms will be fully occupied and when rooms will be
least occupied. Storms, wildfires and natural calamities are out of control of the
consumers. Apart from that, direct impact of weather and natural calamities will have
direct impact on consumer’s visits in hotels.
 Competitors – consumer’s purchasing trends also depends on the existence of
competitors. If the competitors are offering the same goods or services with lower
price the consumers will definitely avail the service from the competitors. It can be
determined through carrying out market research regarding competitor analysis.
 Laws – changes in federal, state or local laws will have direct impact on the business
if the services become outlawed or highly regulated. For instance, if the taxes on hotel
spend increases significantly the consumers will definitely lower their expenses on
hotels. It can be determined through analysing recent changes in laws and regulations
(Wang et al. 2016).
Scenario 3
Answer 1
The issues highlighted here is regarding the inventory level and cash flow which in
turn had an impact on kitchen cost. Hence, the reports required to be prepared are the
inventory management report and cash flow report. The inventory management report will

9BUDGETING
highlight the issues regarding the required level of inventories and the impact of exceeding
the level of par stock. On the other hand, the cash flow report will, highlight the issues
regarding the cash outflow and inflow. The report will further highlight the issues regarding
cash flow problem.
Answer 2
For discussing these matters inventory manager, accountant and cash manager shall
be involved. Further, all the details shall be discussed with the higher level managers who in
turn will authorise the decision that will be taken for rectifying the issues.
Answer 3
The inventory related issue shall be discussed with the inventory manager. For
rectifying the issue, 1st of all there shall be proper method of inventory management like
FIFO or LIFO. Further, the stock shall be purchased as per the demand trends for the past
period. For clearing the overstock the company may offer the items with some discount
which in turn may attract the consumer to purchase the bottles (Wild 2017).
Answer 4
In case of cash flow management forecasting and reporting is an important factor.
Using the analytical tool will provide the insights regarding sales and inventories which in
turn will enable to plan for the future. Inventory and sales forecasting reports will allow using
the historical figures that will help in making the investment related decisions (Uwonda and
Okello 2015).

10BUDGETING
Reference
Finkler, S.A., Smith, D.L., Calabrese, T.D. and Purtell, R.M., 2016. Financial management
for public, health, and not-for-profit organizations. CQ Press.
Hashim, A. and Piatti, M., 2016. A Diagnostic Framework to Assess the Capacity of a
Government's Financial Management Information System as a Budget Management Tool.
Malhotra, S., Subramaniam, S., Lorberg, D.J. and Lopes, V.J.P., Mastercard International Inc,
2017. Systems and methods for budget, financial account alerts management, remedial action
controls and fraud monitoring. U.S. Patent Application 15/622,231.
Uwonda, G. and Okello, N., 2015. Cash flow management and sustainability of small
medium enterprises (SMEs) in Northern Uganda. International Journal of Social Science and
Economics Invention, 1(03), pp.153-to.
Wang, Y.S., Li, H.T., Li, C.R. and Zhang, D.Z., 2016. Factors affecting hotels' adoption of
mobile reservation systems: A technology-organization-environment framework. Tourism
Management, 53, pp.163-172.
Wild, T., 2017. Best practice in inventory management. Routledge.
Zinovieva, C.G., Kuznetsova, M.V., Dorfman, T.V., Limarev, P.V. and Limareva, J.A., 2016.
Study of external and internal factors affecting enterprise’s stability. Advances in Systems
Science and Applications, 16(1), pp.62-71.