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Assessment Task 2: Individual Assignment Assessment of the assignment is based on the adequacy and accuracy of the submitted assignment. For all written work students must ensure that they submit their own original work. Any act of plagiarism will be severely penalised. Students must: · fully reference the source(s) of all material, even if you have re-expressed the ideas, facts or descriptions; · acknowledge all direct quotations; and · Not submit work that has been researched and written by another person. Your work will be assessed in terms of the following criteria: 1. Effectiveness of communication – i.e. readability, legibility, neatness, completeness and presentation 2. Demonstrated understanding of the subject matter covered - This will be evidenced by your ability of submitted answers. Certain aspects of these questions may require some assumptions to be made. Therefore, different answers are very acceptable. For ease of marking please specify these if you think it clarifies your decisions and responses. Your assignment must be submitted into the Turnitin drop box on LMS. THH3113 COST AND PERFORMANCE MANAGEMENT FOR TOURISM AND HOSPITALITY (2021 Sem 2) Case study: The Elegant Motel was first opened as the Princes Hotel in 1888. The Motel has 40 rooms. 15 Single rooms, 15 double rooms and 10 family rooms The Motel was refurbished in 2021 and is comprised of a large public bar with full facilities. The owners of The Elegant Motel George hassuccessfully renewed their trading license for the motel, and they have plenty local competitors. George is very concerned about his business that he might succeed only if he cuts down on the costs as they are also hit by the 2020 -21 covid pandemic because of frequent lockdowns. They want to compare their budgeted income and expenses with current year income statement and see how they have performed in the basis of cost and revenue management when compared. George is well aware of the surprises that this pandemic will bring, thus want to know what their major cost drivers are and how can they be reduced in future. They want to be proactive thus forecast and decide for any extra costs that they might incur in running their business. As their current revenue manager, you are approached to evaluate factors affecting value perceptions in accommodation services. George is sure that you can help them to point out the cost drivers and evaluate management cost drivers that measure performance of the cost control. George wants you to prepare a business cost analysis, performance analysis report and cost control measures for 5 expenses that can be controlled with reasons on how they can be controlled or minimized The extract of The Elegant Motel is below which you should use for your analysis. Income & Expenses Statement for The Elegant Hotel for the year ended 30th June 2021 Budgeted Income statement 2020 -2021 Current income statement - 2020-2021 INCOME Total rooms sales $1,419,000.00 $1,689,870.00 TOTAL SALE $1,419,000.00 $1,689,870.00 Expenses Advertising charges $75,000.00 $90,000.00 Bank Fees $540.00 $576.00 Room attendant wages $240,000.00 $284,000.00 Room Cleaning & cleaning products $12,000.00 $18,000.00 Credit card commission $15,963.75 $19,011.04 Electricity & Gas $18,562.50 $24,750.00 Netflix subscription $191.88 $191.88 Front desk Permanent full-time employees Salary $286,000.00 $286,000.00 Property insurance $2,400.00 $2,400.00 Public liability insurance $899.00 $899.00 Motel general Repairs & maintenance $5,400.00 $6,800.00 Linen cleaning $5,760.00 $6,600.00 Superannuation for employees $52,600.00 $57,000.00 Linen purchases for rooms $32,000.00 $28,000.00 Waste removal $5,520.00 $5,940.00 Water charges $26,652.00 $34,140.00 Yearly Website hosting expenses $1,500.00 $1,500.00 Travel agent commission $42,000.00 $64,000.00 Reservation System Fees $12,000.00 $14,000.00 Printing and stationary expenses $16,000.00 $21,000.00 Total Expenses $850,989.13 $964,807.92 Month Net Profit / (Loss) $568,010.87 $725,062.08 NOTES: 1. The bank fees depend on the number of transactions that takes place in the restaurants 2. There was an unexpected equipment failure in the hotel during in the months of December that has increased the repair expenses (this was mainly because of poor record keeping for the equipment’s maintenance) 3. The management has implemented some strict waste reduction measure but still the waste removal charges have increased. 4. George usually purchases new Linen for the Motel every year Analysis and Report (30 marks. Approximately 1250 – 1500 words) 1. Cost Analysis: (10 Marks) Calculate and recommend George which of these following expenses are high and should be controlled when compared with revenue. Analyse Relation between the cost and revenue increase or decrease? Use the Vertical analysis tools (10 MARKS) 2. PERFORMANCE ANALYSIS (VARIANCE): (5 Marks) Perform a variance analysis on the following report and discuss about the variances in performance when compared to their budget 3. Cost Control: (10 Marks) Identify and evaluate cost control areas and recommend how they can control them in future by better cost management. Identify and critically appraise & evaluate cost drivers and their behaviours. Identify 5 cost control theories to control cost (10 MARKS) 4. Report Presentation with no errors is awarded (5 marks) (you can use Microsoft excel to work on your assignment and import it to Microsoft word when writing your report – You need to use the report format submitted below – otherwise you will be losing the presentation part marks) Further Instructions: 1. Your assignment must be submitted no later than the Sunday ending week 7 ( 11:59 PM.) Assessment tasks submitted after the due date, without prior approval or arrangement, will be penalised by ten percent. Requests for extension of time must be made with your lecturer and based on Special Consideration guidelines using the special consideration form. 2. It is preferred you do your assignment using Microsoft word 3. This assignment must be handed in for successful completion of the course and will count as 30 marks towards the final mark. 4. All assignments are to be uploaded to the Turnitin link Your report should be in this format: Contents Page: A. Report Overview (100 – 150 words) B. Body of the Report (total 25 Marks) (body of the report should comprise of the following) 1. Cost & revenue Analysis: (10 Marks) Calculate and recommend George which of these following expenses are high and should be controlled when compared with revenue. Analyse Relation between the cost and revenue increase or decrease? Use the Vertical analysis tools (10 MARKS) 2. PERFORMANCE ANALYSIS (VARIANCE): (5 Marks) Perform a variance analysis on the following report and discuss about the variances in performance when compared to their budget and explain the 3. Cost Control: (10 Marks) Identify and evaluate cost control areas and recommend how they can control them in future by better cost management. Identify and critically appraise & evaluate cost drivers and their behaviours. Identify 5 cost control measures to control cost (10 MARKS) C. References: References page & overall presentation with no errors is awarded (5 marks)(you can use Microsoft excel to work on your assignment calculation part and import it to Microsoft word when writing your report. Please use proper referencing where needed using APA style - You need to use the report format as stated with contents page– otherwise you will be losing the presentation part marks) 1 1 1