Assignment 5 Review Questions for Accounting and Financial Analysis in the Hospitality Industry

Hospitality Industry Accounting Assignment
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Fixed wage expenses are the type of salary payments made by the company that does not change regardless of the level of production undertaken by the company. They also remain constant even when the company makes differing sales figures (Cook, Hsu & Marqua, 2014). On the other hand, variable wage expenses are the salary payments made by the company that fluctuates along with the volume of sales and level of production. An example of a fixed wage expense is the amount of money paid to the hotel receptionist at the end of each month. A good example of a variable wage expense is the amount of commissions paid to a hotel’s sales executive after making a specific revenue.
The forecasting timeline is made up if seven distinct steps that are vital to the company’s long-term sustainability. First, the financial analysists of the company are required to identify all the variable and fixed costs. Secondly, the breakeven point is required to be noted in terms of sales. Thirdly, the financial analysts are expected to calculate the probability attaining the breakeven point (Cook, Hsu & Marqua, 2014). Fourth, the expected timeframe that the company needs to reach the breakeven point that is also cognizant of the probability calculated earlier is highlighted. Fifth, the company’s accountants are required to determine a backup capital reserve that will help it to run its operations. Sixth, the accountant identity the forecasted incomes.

Finally, the forecasted incomes are translated into cashflows. Forecasting is important to the business’ profitability because it helps the management to decide the level of financial requirements that will smoothen its operations. Forecasting also facilitates the proper use of the firm’s financial resources. The business’s strengths and weaknesses are also determined through this process.
References
Cook, R. A., Hsu, C. H., & Marqua, J. J. (2014). Tourism: the business of hospitality and travel. Boston, MA: Pearson.