Diploma of Hospitality Management SITXFIN004 Prepare Monitor Budgets

Read the following 3 scenarios and answer the questions attached for each scenario.

Scenario 1:

The finance team has created budget forecasts for Hotel Futura based on carefully researched factors for the last 3 years and these were always very accurate. The recent budget which included all departments of the hotel was implemented 3 months ago and the forecasted figures for Food Cost and COGS/Beverages in both the Restaurant and the Bar Operations have blown out by nearly 4.5 percent.

What could be the reasons for this? List 5 examples of areas you would investigate and explain why.

Scenario 2:

Hotel Futura has successfully operated for 7 years. During this period, overall turnover has doubled, and during the past 3 budget periods annual budgets have been increased by 15% each year which was exceeded each time. During the last 6 months however, management has noticed that the opposite trend seems to be occurring now.

List 5 external factors which could contribute to this and explain which methods you would use to determine this.

Scenario 3:

You have successfully negotiated the draft budget with each department head of the Hotel which has now been approved by the director and implemented 6 weeks ago.

You have finalised the financial data of the Hotel for the next management meeting and noticed the following:

a.kitchen-

Budget 28%

Actual 32%

Variance (-)$ 13467

b.The recently appointed F&B Manager has purchased 240 bottles of Hill of Blessings @ $90 each which represents a saving of $30 per bottle. However, this exceeds the par stock level by 220 bottles and has created a cashflow problem, given the negative performance of the kitchen during this period as well.

1. Which reports would you need to prepare for these issues?

1. Who is it essential to involve when these matters need to be discussed?

1. Suggest options to address and rectify these issues.

1. How could the cashflow issue be addressed?