Prepare a budgeted profit statement for next year

SKU: wufoo35 Category:
  • Guest related costs
  • Restaurant & Bar
  • Room related costs


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1. Individual Assignment 

The management of a hotel is planning for the next yew. The hotel has 100 bedrooms. The nice of a room night includes breakfast for the guests. Other services (a snack service and a bar and restaurant) tax available but are not included in the mice of the room night. These additional services are provided to hotel guests only.

For planning purposes the hotel tides the year (based on 360 days) into three seasons: peak. mid and low.

Details of the hotel and its services and forecasts for the next year are given below


1. Seasons, room charges, room occupancy, guests per room and room revenue

The hotel charges a ;nice per 1000 per night (including breakfast) Irrespective of the number of guests per room The price charged is deferent in each of the seasons

Number of days90120150
Price charge per room per night ($)1008055
Hotel room ocupancy(%)957550
Average number of guests per room1.81.51.2
Total room revenue($)855,000720,000412,500


2. Guest related costs

The hotel incurs some costs. including providing breakfast that are directly related to the m=ber of pests in the hotel. These are $12 per guest per night in all seams.


3. Room related costs

The hotel incurs some costs that are directly related to the number of rooms occupied. These include cleaning and laundry costs of Si per occupied mom per night regardless of season There are also power and lighting costs of S3 in the peak season S4 in the mid season and 56 in the low season per occupied room per night.


4. Hot snacks

The hotel offers a 24-hour hat stacks since to the pmts. Past records show that this service has been used by 30% of its guests in the mid and low seasons but only 10% in the peak season. h is forecast that the average spend per guest per night will be 510. The hotel teams a 30% gross contribution from this income.

The hotel employs a cook on a salary of S20.030 per year to provide this service. All of the costs for the hot snacks since. except for the cook’s salary. are variable. The wok could be made redundant with no rectindancy costs.


5. Restaurant & Bar

Past records show that the maze of the restaurant and bar is seasonal The restaurant and bar are panicularly popular with the haters business aunt. The forecast usage is shown below.

Saxon Daily demand

Peak 30% of hotel guests spend an average of $15 each

Mid 50% of hotel guests spend an average of $20 each

Low 70% of hotel guests spend an average of $30 each

The hotel earns a 25% gross contribution from this income and employs two chefs on a combined salary of $54,000 per year to provide this facility. All of the costs in the restaurant and bar, except for the salaries of die chefs, are variable. The two chefs could be made redundant with no redundancy costs.


6. General hotel costs.

These Mehl& the costs of reception staff. the henna and lie hong of the common areas and other facility related costs. The forecast costs for next year are:

Peak season 5300.000

Mid season 5400.030

Low season 5500.000

These costs could be reduced by 75% if the hotel were to close temporarily for one or more seasons of the year There are also some costs that are incurred by the hotel and can only be meded by its permanent closure. These are estimated to 5200.030 for text year.

The senior management team of the hotel has asked yot as management accountant. to prepare a Management Report (m approximately 1.750 words) providing them with the following

Your report should:

• Have a table of contents. introduction. main body. & conclusion. (No executive summary is needed).

• Please include a bibliography if you use any references.


Your report should cover the following:

i)Prepare a budgeted profit statement for next year. Your budget must show the hotel’s revenue and the contribution by season (i.e. peak season. mid season and low season). In addition. roux budget must show the contribution from each type of the hotel services (i.e. hotel rooms. hot snacks: restaurant and bar).

(ii) Define what you understand by the term. ‘Strategic management accounting’. critically evaluate any academy literature and refer to recent developments on the subject You should include a detailed analysis of how the introductice of one technique (that might be considered to be a ‘strategic management accounting technique) could benefit the hotel.

• Assessment of your assignment will take into account:

– Relevance of law report to the case.

– Clarity of expression.

– Logical planning and sequence.

– Comprehensive coverage



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