Hotel Financial Statements
Transcript of Hotel Financial Statements
Hotel Financial Statements
Uniform System of Accounts
1925 by Hotel Association of New York city 10th version revised in 2006. Special format for income statement and
balance sheet for hospitality businesses Nature of the operations and organization of the
hotels influences this format Revenue centers vs. support centers Direct expenses vs. indirect expenses Departmental income statements Responsibility accounting
Nature of OperationsHotel
Revenue Centers Support Centers
Rooms
Food and Beverage
Telephone
Gift Shop
Rentals and Other
Administrative and General
Data Processing
Human Resources
Maintenance
Marketind and Sales
Departmental Income Statements Expense Schedules
Departmental Income Statements
Three major operating areas:RoomsFood Beverage
Other significant revenue producing departments: Minor revenue centers
Food and beverage usually reported together
Departmental Income Statements
Includes revenues and expenses of that department only (direct expenses)
Revenues-Allowances=Net Revenue-Cost of Sales=Gross Profit-Payroll and Related Expenses-Other Direct Expense=Departmental Income (Contributory Income)
General Format
F&B Income Statements
Special feature of F&B Departmental Income StatementsCalculation of cost of food and beverage sold
Cost of food used Transfers from/to beverage department Cost of food sold Employee meals and cost of promotion meals Sale of scrap = reduction from cost of sales
Cost of Food Sold – Pr. 2.2
Beginning Inventory 2.428+ Purchases 8.907Total Available 11.335- Ending Inventory 1.611Cost of Food Used 9.724- Cost of Employee Meals 209- Cost of Promotion Meals 278Cost of Food Sold 9.237
Cost of Food Sold – Pr. 2.3
Beginning Inventory 14.753+ Purchases 48.798+ Transfers from bar 48- Transfers from kitchen 107Total Available 63.492- Ending Inventory 12.811Cost of Food Used 50.681- Cost of Employee Meals 1.208- Cost of Promotion Meals 410Cost of Food Sold 49.063
Revenues:Grill Room 153.100Cofee Garden 78.900Banquets 298.400Other Income 600
Total Revenue 531.000
Cost of Sales:Cost of Food Used 228.900- Employee Meals 17.200
Net Food Cost 211.700Gross Margin 319.300
Departmental Expenses:
Salaries and Wage. 191.600China, glassware 14.600Laundry and linen 13.000Licences 1.900Printing, stationary 4.900Various other 6.200
Total Departmental Expenses 232.200Departmental Income 87.100
Food Department Income Statement
Pr. 2.1
Use of Income Statement
Reveals important informationSales volumesSales level and cost relationsSales by departmentsOperational effectivenessContributory income percentagesBudgets and comparisons of actual and
budgets
Hotel Income StatementRooms Dept. I+S Food Dept. I+S Beverage Dept. I+S
Total Departmental Income
- Undistributed Operating ExpensesSupport Centers
= Income before Fixed Charges
Ownership Expenses- Fixed Charges
= Income before Taxes –Taxes = Net Income
Major Categories of Hotel I+S Operated Departments
Rooms Food and Beverage Minor Operated Departments
Undistributed Operating Expense Administrative and General Data Processing Human Resources Marketing Property Operation and Maintenance Energy Costs
Fixed Charges Rent, Property Taxes, Property Insurance Interest Expense Depreciaiton and Amortization
Revenue Centers
Support Centers
Ownership Related
Expenses
Departmental Incomes:Food Department 87.100Rooms 482.700Beverage 143.600Telephone -25.100Other Income 40.300
Total Departmental Income 728.600- Undistributed Operating Expenses
Admin. & Genaral 174.300Marketing 83.600Property, mainten. 74.900Energy 62.000
Total Undist. Expenses 394.800Income Before Fixed Charges 333.800- Fixed Charges
Insurance 5.200Property tax 43.100Interest 65.000Depreciation 125.700
Total Fixed Charges 239.000Income Before Tax 94.800Tax - %50 47.400Net Income 47.400
Hotel Income Statement – Summary Form
Inventory Valuation – Cost of Sales
Different inventory valuation methodsSpecific item costFirst-in-first-outLast-in-first-outWeighted average cost
Specific Item CostJune Received Issued Units Cost($)
1 2 182 6 8 208 3 5
12 3 215 10 12 2220 3 924 3 628 6 12 1930 2 10
Beg. Inv. 36Puchases 454End.Inv. 204Cost of Sales 286
Ending Inventory2 20 404 22 884 19 76
204
First-in First-OutFIFO
June Unit Cost Unit Cost Unit Cost Total1 2 18 362 6 20 2 18 36
6 20 1208 2 18
1 20 5 20 10012 3 20 2 20 4015 10 22 2 20 40
10 22 22020 2 20
1 22 9 22 19824 3 22 6 22 13228 6 19 6 22 132
6 19 11430 2 22 4 22 88
6 19 114Ending 202
Received Issued Balance
454 288
Last-in First-OutLIFO
June Unit Cost Unit Cost Unit Cost Total1 2 18 362 6 20 2 18 36
6 20 1208 3 20 2 18 36
3 20 6012 3 20 2 18 3615 10 22 2 18 36
10 22 22020 3 22 2 18 36
7 22 15424 3 22 2 18 36
4 22 8828 6 19 2 18 36
4 22 886 19 114
30 2 19 2 18 364 22 884 19 76
Ending 200
Received Issued Balance
454 290
Weighed Average Cost
WAC
June Unit Cost Unit Cost Unit Cost Total WAC1 2 18 362 6 20 2 18 36
6 20 120 19,58 3 19,5 5 19,5 97,5
12 3 19,5 2 19,5 3915 10 22 2 19,5 39
10 22 220 21,5820 3 21,58 9 21,58 194,2524 3 21,58 6 21,58 129,528 6 19 6 21,58 129,5
6 19 114 20,2930 2 20,29 10 20,29 202,9167
Ending 202,9167
Received Issued Balance
454 287,08
Do Problem 2.4
Restaurant Departmental Contributory Income Statement- Without allocation of Indirect Expenses
Departmental IncomesDining Banquet Beverage Total
Sales 202.000 108.000 90.000 400.000Cost of Sales 81.000 41.000 28.000 150.000Wages&Salaries 64.455 34.795 12.000 111.250Other Direct Costs 18.640 8.960 1.600 29.200Contributory Income 37.905 23.245 48.400 109.550Indirect ExpensesAdm&General 13.000Marketing 9.000Utilites 6.000Prop.Op.&Maint. 12.000Depreciation 14.000Insurance 2.000Total 56.000Net Income 53.550
Allocation of Indirect Expenses
Based on an allocation key Artificial In this example: assume
Administrative & General and Marketing expenses to be allocated on the basis of sales volume
Dining: 202,000/400,000 = 50.5% Banquet: 108,000/400,00 =27.0% Beverage: 90,000/400,000 = 22.5%
All others to be allocated on square foot basis Dining room – 2400 sq.ft. Banquet – 3000 sq.ft. Service bar – 600 sq.ft.
Restaurant Income Statement-Allocation of Indirect Expenses
Departmental IncomesDining Banquet Beverage Total
Sales 202.000 108.000 90.000 400.000Cost of Sales 81.000 41.000 28.000 150.000Wages&Salaries 64.455 34.795 12.000 111.250Other Direct Costs 18.640 8.960 1.600 29.200Contributory Income 37.905 23.245 48.400 109.550Cont.Income % 18,8% 21,5% 53,8% 27,4%Indirect ExpensesAdm&General 6.565 3.510 2.925 13.000Marketing 4.545 2.430 2.025 9.000Utilites 2.400 3.000 600 6.000Prop.Op.&Maint. 4.800 6.000 1.200 12.000Depreciation 5.600 7.000 1.400 14.000Insurance 800 1.000 200 2.000Total 24.710 22.940 8.350 56.000Net Income 13.195 305 40.050 53.550
Revenue Mix Effect –Shift of $16,000 revenue from banquet to dining room.
Sales 218000 92000 90000 400000Cost of sales 87416 34926 28000 150342Wages 69560 29640 12000 111201Other Department. 18640 8960 1600 29200Contribu.Income 42384 18474 48400 109258
Allocated Exp.Adm&Gen 7085 2990 2925 13000Marketing 4905 2070 2025 9000Utilities 2400 3000 600 6000Prop Maint 4800 6000 1200 12000Depreciation 5600 7000 1400 14000Insurance 800 1000 200 2000
25590 22060 8350 56000Net Income 16794 -3586 40050 53258
Balance Sheet - Assets
Current AssetsCash on HandCash in BankMarketable SecuritiesCredit Card ReceivablesAccounts Receivable Inventories
Food and beverages, suppliesPrepaid Expenses
Balance Sheet - Assets
Fixed AssetsLand, Building, Furniture and Equipment
-Accumulated DepreciationChina, Glass, Silver, Linen and UniformsOther Assets
Deposits Investments Leasehold costs and leasehold improvements Deferred Expenses
Balance Sheet - Liabilities
Current Liabilities Accounts payable Accrued Expenses Income Tax Payable Unearned Income – Deposits and credit balances Current Postion of Long Term Mortgage Dividends Payable
Long Term Liabilities
Balance Sheet - Equity
Capital Stock Capital Surplus – Paid-in-Capital in
Excess of Par Value Retained Earnings
Review Exhibit 2.8 and 2.9Do Problem 2.7
Balance Sheet Limitations
Historical cost: does not show market value Some qualitative aspects totally ignored- such
as goodwill Human resources not treated as assets Subjective matters such as depreciation Shows result only for a moment – window
dressing