Case study A The Jackson hotel has a bistro, two bars (public and sports), a drive-through and walk-in bottle shop and TAB situated beside the sports bar. You are the manager of JJ's Bistro. It seats 210 people and is open for lunch and dinner, seven days a week. The hotel promotes a family environment and has a playroom for younger children and an activity centre for pre-teens containing electronic and other games. These glasses walled areas are within view of customers seated in the rear section of the bistro. The hotel's management team develop an operational budget for the business based on previous budgets, anticipated business and any special projects, such as renovations or new products. Each operational area within the hotel is given a departmental budget based on organisational goals and their anticipated revenue and expenses. Budgets are developed on a quarterly basis. Each department has quarterly and monthly budget targets. Monthly budgets can be adjusted during a quarterly cycle if circumstances within the department change The following events have taken place during the April budget period. Prices for meat, fruit and vegetables have increased as a result of recent drought in some regions and floods or storms in others. Prices for many wines have fallen due to a surplus in the market. Beer prices have risen slightly, again due to the drought leading to shortages of ingredients and an ncrease in government taxes A major wine supplier has been running an in-house promotional campaign, with staff product knowledge training provided to help increase sales. The bistro menu changes to the new winter menu on May 1st. Its introduction is being promoted in April throughout the hotel. April MAY June quarter $ $ $ $ Revenue Food sales 116,800 127,750 120,450 365,000 Beverage sales 240,000 247,500 262,500 750,000 Tab commission 49,300 47,850 47,850 145,000 Total revenue 406, 100 423,100 430,800 1,260,000 Cost of sales Food purchases 48,180 49,640 48,180 146,000 Beverage purchases 84,000 86,625 91,875 262,500 Total cost of sales 132,180 136,265 140,055 408,500 Gross profit 273,920 286,835 290,745 851,500 Expenses Accounting 2,700 3,000 4,300 10,000 Advertising promotions 3,900 4,810 4,290 13,000 Bank charges 7,582 7,359 7,359 22,300 Cleaning contractor 7,451 7,451 7,451 22,354 Commission credit card 767 767 767 2,300 Small equipment replacement 833 833 833 2,500 Insurance 1,833 1,833 1,833 5,500 Laundry 347 357 347 1,050 Legal fees 1,280 360 360 2,000 Licence fees & permits 983 983 983 2,950 Motorvehicle expenses 500 500 500 1,500 Maintenance 4,224 4,352 1,224 12,800 Printing & stationery 800 800 800 2,400 Rubbish removal 500 500 500 1,500 Communication 2,000 2,000 2,000 6,000 Training & development 1,190 1,155 1,155 3,500 Wages & on-costs 193,050 198,900 193,050 585,000 Utilities 12,000 11,647 11,647 35,295 Total expenses 241,941 247,608 242,400 731,449 NET PROFIT 31,979 39,227 48,345 120,051