Prepare and Monitor Budgets of the Last Financial Year At the end of the last financial year.

Prepare and Monitor Budgets of the Last Financial Year and the Profit and Loss Statement

The Resort had the following profit and loss statement.
Revenue                 $                 $
Food          219,000
Beverage            73,000
Accommodation           434,000
726,000
Cost of Sales
Food          54,750 (25%)
Beverage          21,900 (30%)
Accommodation          86,800 (20%)
163,450
Gross Profit        562,550
Operating Expenses
Wages           181,500
Operating supplies             36,000
Administration             18,000
Advertising             36,000
Maintenance             20,000
Utilities             32,000
Depreciation             10,000
Interest             17,500       351,000
Net profit before tax        211,550
The net profit before tax represents 29.1% a very good result in today’s market place

Due to changes in the general economic outlook it will be much harder next year to match this result.

Prepare and Monitor Budgets of the Last Financial Year and the Management Aspects

Management expects an increase in interest rates of 25% per quarter
Fall in patronage of 12%.
The guests they do get will be willing to spend more per head if the staff up sells successfully – management expects a 20% increase in both food and beverage average sales.
You are to draw up a budget for the following year that allows for a profit of 28% based on the above.
Room revenue is based on the following calculation,
The Resort has twelve rooms and over the course of the 365 days that make up a year they have an 83%  occupancy
Each  room is sold fot $120.00  These rooms are all twins
The Resort has to 7,270 guests a year and all food and beverage revenue comes from these guests
Staff wages represent 25% of total revenue and management decided that in order to ensure good service this percentage must remain the same.
It is necessary to show the assumptions you used in producing the new budget.
Calculate  the impact of reduced income and therefore reduced COGS , and increased cost in B

A
Current Budget B
With cost increases
Revenue $ $
Food
Beverage
Accommodation
Toatal Revenue
Cost of Sales
Food
Beverage
Accommodation
Total COGS
Gross Profit
Operating Expenses
Wages
Operating supplies
Administration
Advertising
Maintenance
Utilities
Depreciation
Interest
Total Operating Expenses
Net profit before tax
Clearly explain the impacts of loss in Net profit and the reason for it , and explain how you would try to maintain a positive business to meet new requirements