DL3A35 Managing Financial Resources in Hospitality

This unit and the exercises contained within it will introduce you to the various financial control systems currently used by managers in the hospitality industry. This unit develops some of the concepts of control introduced in the unit Hospitality: Financial and Control Systems and introduces further techniques to assist in the running of a hospitality business. Outcome 1 develops the concept of break-even and includes calculation of break-even point (BEP) both arithmetically and graphically. The study should include: • the relationship between fixed and variable costs and the resulting profit stability and margins of safety • the effect on profitability following changes in selling price or fixed costs. Practical case studies should compare how alternative scenarios (involving adjustments to costs and selling prices) will affect a business. It will be assessed by a case study with alternative scenarios from which you should choose the most profitable. Outcome 2 introduces the concept of budgeting and the production of a cash budget. This unit has four outcomes: 1. Apply break-even analysis in practical decision making 2. Prepare a cash budget for a hospitality operation 3. Prepare statements reconciling budgeted and actual net profit using variance analysis 4. Apply various pricing methods for a hospitality operation