Assignment Task:
Learning Outcomes
1. Demonstrate an understanding of accounting and control issues that arise from the operational characteristics evident in a hospitality and tourism setting.
2. Use accounting information to interpret and comment on the strategic and financial performance of the hospitality and tourism organisations.
3. Successfully apply a range of financial analysis techniques and critically evaluate competing results to make appropriate management decisions for the effective hospitality operations performance issues.
Assignment Components
The assignment comprises three tasks:
1. Purpose of the Budgeting Process and the Variance Analysis (T1)
2. Variance Analysis for one event & Recommendations (T2)
3. Strategic Considerations (T3)
While this assignment provides you with insights into the purpose of operational budgetary process within the hospitality industry, be aware that the tasks 2 & 3 are interrelated. In addition, please be reminded that you must read the instructions carefully and provide references were appropriate, particularly for the first task (T1).
Please note that this is a practical assessment that must demonstrate your ability to apply financial and operational knowledge and concepts. However, it is even more important that you also demonstrate your understanding and ability to interpret the information in respect to its implications for the operational decision-making processes within the hospitality business.
To conduct your assignment, you must analyse the three levels of the variance analysis for one of your events initially budgeted. Every group member must choose a different event to analyse.
Task 1 (T1): Purpose of the Budgeting Process and the Variance Analysis (10 marks)
1. Discuss the benefits of using budgets in the tourism and hospitality industry.
2. Discuss the importance and shortfalls of using financial performance measures for performance evaluation. (Ensure to provide examples)
Task 2 (T2): Variance Analysis for one Event & Recommendations (17.5 marks)
1. DATA: You must use the Excel file (data) which was provided under your group link
2. You have to show all calculations using the Excel functions (no typing) as demonstrated in the lecture-discussion forums and in the Excel recordings accessible via ECHO360.
3. You must copy the Variance tables from Excel in your report.
1. Sales Revenues:
i. Provide a two-level analysis for the events sales revenues. This analysis includes the calculations of the master budget variance, price variance, and sales volume variance.
ii. Identify and explain potential reasons for the sales price and sales volume variance.
2. Direct Material Costs:
i. Provide a three-level analysis for the direct materials such as the beverage and the main ingredients. This analysis includes the calculations of the master budget, flexible budget, inbetweener, master budget variance, the flexible budget variance, sales volume variance, the direct material price variance and efficiency variance.
ii. Identify and explain potential quantitative and qualitative reasons for the direct material cost and efficiency variances (3rd level of the analysis).
iii. Reflect on recommendations on how to address the variances, identified (2ii) by providing control measures to prevent these variances to occur. You need to discuss all favorable and unfavorable variances.
3. The profitability of Event:
i. Comment on the profitability (e.g. Profit margins) of your event and discuss how it was affected by the variances.
Task 3 (T 3): Strategic Considerations (12.5 marks)
1. Assess how all variances found in T2 (1ii) & (2ii) support or contradict the strategic objectives formulated in your strategic map from A2 (Group presentation).
2. Discuss the implications from the variances T2 (1ii) & (2ii) for building up a beneficial long-term customer relationship. End of instructions If you are not certain about your balanced scorecard (BSC), strategic objectives and how they relate to the observed variances, you can use the following generic BSC. It entails the most basic strategic objectives which can be applied to any restaurant.
