Subject Code : AF5108
Assignment Task:
AF5108 - Multidivisional Business - Occupancy - Dynamic Nature - Budget Model - Accounting Assignment Help 

 

QUESTION 1
Acrux Group is a multidivisional business established in Hong Kong since the 1980s. The firm has two major subsidiaries: Plunkett Hotels and Resorts, and Honshu
Properties.
Plunkett Hotels and Resorts is a five-star resort with presence in major tourist destinations across Asia-Pacific and Australia. Guests pay an all-inclusive flat rate to enjoy all the services offered by the resort, which includes accommodation, food and beverages, spa and sauna, and a variety of sport activities organized by the fitness
club. Each service is organized as a department for management purposes. Due to its excellence services, Plunkett has received numerous awards in the past and it has been expanded from a single resort hotel to 15 resort hotels.
The General Manager in each Plunkett’s resort is treated as a profit centre, and their annual bonuses is determined based on the difference between actual as compared to the budgeted profit at year end. In the past, Plunkett’s annual budget is based on the projected occupancy rate and expected costs. The annual budget will then be divided into monthly budgets based on the number of days in the month and seasonal demand fluctuations.
During the middle of 2017, Plunkett has changed it’s CFO and she felt that the old budgeting approach does consider the dynamic nature of the tourism market (The peak season for most of the Plunkett’s resort hotels are in the months of January, July, August and December). To ensure the budget reflects the most updated demand and cost information, she adopts the rolling budget approach starting from 2018 fiscal year. Before the fiscal year begins, the head office sets the target, for each resort, the variable cost per room occupied for each department (i.e. accommodation, food and beverage, spa, and fitness club), along with the fixed costs target on these\ departments for the entire year. Each department’s annual fixed cost target will then be divided into monthly targets based on the number of days.
Under the new budgeting approach, the General Manager of Plunkett’s resort is evaluated using the flexible budget. Bonuses are determined based on the difference between budgeted and actual expenditures.

 

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  • Uploaded By : ethan
  • Posted on : December 24th, 2018

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