Finance in the Hospitality Industry

Project description
M1
Identify and
apply strategies
to find appropriate
solutions.

Type the content please !

• effective judgements have been made
• complex problems with more than one variable have been explored
• an effective approach to study and research has been applied

Use of appropriate formula and provide illustration of the approach used to find solution to problems
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M2
Select / design and
apply appropriate
methods/techniques

• relevant theories and techniques have been applied
• a range of methods and techniques have been applied
• a range of sources of information has been used
• the selection of methods and techniques/sources has been justified
• the design of methods/ techniques has been justified
• complex information/data has been synthesised and processed
• appropriate learning methods/techniques have been applied

Learners need to demonstrate that they have use a range of sources of information throughout the completion of their assignment. This will be evidenced by the appropriate use of the Harvard referencing system in-text and the reference list
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M3
Present and
communicate
appropriate findings.

• the appropriate structure and approach has been used
• coherent, logical development of principles/concepts for the intended audience
• a range of methods of presentation have been used and technical language has been accurately used
• communication has taken place in familiar and unfamiliar contexts
• The communication is appropriate for familiar and unfamiliar audiences and appropriate media have been used.

The structure of the overall assignment should be appropriate with the required text font and size, clear paragraphs. Answer should be presented in appropriate format as stipulated in questions.

Assignment Front Sheet
Assignment Code:       …AB137H2…
Name:                   ………………………………………….
Registration Number:       ……………………………………………
Date:                   ……………………………………………

Is this a First Submission         or Second Submission        ?
Word Count (max.5000)
Programme:       BTEC Higher National Diploma (HND) in Hospitality Management
Unit Title and Number:   Finance in the Hospitality Industry (Unit 2)
QCF Level:   4
Unit Code:   R/601/1789
Credit value:   15 credits
Module Tutor:   Yannick Fansi
Email:   y.fansi@mrcollege.ac.uk
Date Set:   1
Assignment Resubmission Policy
A Resubmission is any work handed in for final assessment a second time.
The Final Deadline is the date on which the whole assignment must be completed and submitted (usually in week 12 at the end of the semester).
Work submitted                    To be Resubmitted

1.   Referred after Final Deadline           Four weeks after the final deadline
2.   Missed Final Deadline               End of next semester
3.   Missed formative assessment(s) and
Referred after Final Deadline           End of next semester
4.   Referred SMALL after resubmission           £25 reassessment fee
5.   Referred LARGE after resubmission           Repeat semester and attend classes

Completed, assessed units (Pass, Merit) from your first Semester may be reworked and submitted for a higher grade once only on payment of a reassessment fee of £25.
Programme   :   BTEC Higher National Diploma (HND) in Business
Unit Title and Number   :   Finance in the Hospitality Industry (Unit 2)
QCF Level:   4
Unit Code   R/601/1789
Credit value:   15 credits
Module Tutor:   Yannick Fansi
Email:   y.fansi@mrcollege.ac.uk
Date Set:   15/05/2014

Distribution Date : 19/05/2014
Final Submission Date (Full Assignment): 18/07/2014

“Accounting and finance have a language of their own with a variety of statements and techniques that can mystify non-accounting colleagues”. (Mott, 2012)
This unit covers various aspects of financial and management accounting, essential for learners who would like a career in the field and wish to gain membership of a professional accounting body.
This unit is designed to give learners a broad understanding of the sources and availability of finance for a business organisation. Learners will learn how to evaluate these different sources and compare how they are used. Learners will learn how financial information is recorded and how to use this information to make decisions for example in planning and budgeting. Finally, learners will learn and apply techniques used to evaluate financial performance.

The aim of this assignment is to assess the learner’s knowledge of the all aspects of the unit
Task 1 covers AC1.1 and AC1.2
Task 2 covers AC2.1 and AC2.2
Task 3 covers AC3.3 and AC3.4.
Task 4 covers AC3.1, AC3.2, AC4.1 and AC4.2
Task 5 covers AC5.1, AC5.2 and AC5.3

Learners are encouraged to be familiar with the assessment criteria and contextualised grade descriptors before completing these tasks.

• A review of the sources of funding available to business and service industries (P1.1)
• An evaluation of the contribution made by various methods of generating income for a large chain restaurant. (P1.2)

You are in a small business as a sole trader. You wish to purchase some new machinery costing £50,000. Capital expenditure may be financed by a variety of external sources (as well as internal). Capital investment appraisal is an important decision-making function. The selection of a particular project and the most appropriate means of financing it are difficult decisions to make. As a senior manager you will receive some expert advice on what you can do. Ultimately, the final decision will be one for you.
• Review of the sources of funding available to business and service industries (1.1)
• Evaluation of the contribution made by various methods of generating income for a large chain of restaurants. (1.2

CASE STUDY: Monitoring and controlling performance at Marks & Spencer
Marks & Spencer is Europe’s most profitable retailer with a global brand and global recognition. Its achievement largely depends on the effective use of people. An organisation may have the latest technology and the best physical resources, but it will never thrive if it does not value its people. Its most valuable asset will always be its people and the work they do. For Marks & Spencer, this means that the people who look after customers, select and merchandise the products and run the operations, must aspire to be the best qualified and equipped in retailing.
The effective control of stock and cash is also an important factor for a business. While the Commercial Manager is generating enough sales to meet the forecast, and the Personnel Manager is controlling the agreed staffing budget, the Financial Manager will monitor all other costs. Costs are broadly broken down into direct costs and indirect costs. Direct costs are those clearly identified with the sales volume. They include carrier bags, food waste and staffing costs. Indirect costs include stationery, telephone expenses, security and electricity.
Making the store more profitable involves looking not just at the large direct costs but also examining the smaller indirect costs. (Savings in stationery in one store may be small, but across the whole Marks & Spencer Group, it may represent a considerable sum.)
Some costs are easier to control than others. For example, notices near light switches may be a simple way to save electricity by encouraging staff to turn off unnecessary lights. The use of stationery may simply be limited to the amount ordered. Costs such as theft and loss, however, may take up much more time, involving maximising the benefits of close-circuit television, using security guards efficiently to deter crime and deciding how to use store detectives. With around 35 tills in an average store, possibly being using by up to eight to ten staff each day and with large volumes of stock coming in at the back door, it will also involve close scrutiny of all areas of business organisation.

Required: With reference to the case above,
• Discuss elements of cost, gross profit percentages and selling prices for products and services (P2.1)
• Evaluate methods of controlling stock and cash in a business and services environment (P2.2)

Yuri, a cutlery manufacturer, produces spoons. The market in which the business operates is highly competitive, as there is a shortage of steel of adequate quality. There is a good availability of labour, but not of those who are experienced in cutlery manufacture. The budgeted and actual figures for the previous period are represented in the tables below

Budget                  Actual                      Variance
Units sold                              100,000                  75,000                       (25,000)
Materials                              £ 15,000                   22,500                        (7,500)
Direct labour                        £ 22,500                   24,375                        (1,875)

Material (£)         Labour (£)
Price/rate variance                        (4,500)                  3,750
Usage/efficiency variance            (3,000)                 (5,625)
Total variance                                 (7,500)                    (1,875)

Required:
•   Discuss the process and purpose of budgetary control and outline the budgetary control cycle (P3.3)
•   Review the variance analysis of Yuri’s budget. Suggest reason
PART A:
“The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions” (International Accounting Standards Board, 2007).
Financial statements are intended to be understandable by readers who have “a reasonable knowledge of business and economic activities and accounting, and who are willing to study the information diligently”. They may be used by different users for different purposes.
You are required to
1.   Assess the source and structure of the trial balance and to make adjustments to the profit and loss accounts and balance sheet of R. Riggs on discovery of the following mistakes in recording various transactions during the financial year. (P3.1, P3.2)
i.   Additional furniture worth £525 were purchased on credit on 3 March 2012 but were not recorded
ii.   The business receive interest of £50 on their deposit from the bank on 30 December 2012 but this transaction was not recorded
iii.   Accrued expenses of £200 were paid on 4 June 2012 but were not recorded.
2.   Calculate the following ratio for R. Riggs and write a brief memorandum report to recommend appropriate strategies to improve the performance of the business. (P4.1, P4.2)
i.   Gross profit and Net profit margin
ii.   Current and acid test ratio
iii.   Debtors and creditors payment periods and stock turnover

R Riggs
Profit and Loss Account for the year ended 31 December 2012
£                           £
Sales                                                                                                                                         157,165
Less Cost of goods sold:                                                           94,520
Gross profit                                                                                                                                  62,645
Discounts received                                                                                                                               160
62,805
Less Expenses:
Wages and salaries                                                                                         31,740
Rent                                                                                                                     3,170
Discounts allowed                                                                                               820
Van running costs                                                                         687
Bad debts                                                                                    730
Doubtful debt provision                                                                      91
Depreciation                                                                             1,630                   38,868
Net Profit                                                                                                                    23,937

R Riggs
Balance Sheet as at 31 December 2012
£                        £                         £
Fixed assets
Office furniture & Van                                                                                6,650
Less depreciation                                                                                       1,630                  5,020
Current Assets
Stock                                                                                                                       2,400
Debtors                                                                                         12,316
Less provision for doubtful debts                                                  496           11,820
Prepaid expenses                                                                                                     230
Cash at bank & hand                                                                                            4,424       18,874
Total Assets                                                                                                            23,894

Current liabilities
Creditors                                                                                              5,245
Accruals                                                                                               412
5,657
Financed by
Capital       11,400
Add net profit                                                                                                                                      23,937
Less drawings                                                                                                                                       17,100
23,894

Looking ahead to the financial year ending 31 March 2012, the directors of Problems
Limited are faced with a budgeted loss of £10,000. This is based on the following data.

Budgeted number of units: 10,000
£000
Sales revenue 100
Less: Variable costs 80

Contribution                        20
Less: Fixed costs                                                                        30
––––
Budgeted loss                                                                          (10)
––––––––
The directors would like to aim for a profit of £20,000 for the year to 31 March 2012.

Various proposals have been put forward, none of which require a change in the budgeted level of fixed costs. These proposals are as follows:

1.   Reduce the selling price of each unit by 10 per cent.
2.   Increase the selling price of each unit by 10 per cent.
3.   Stimulate sales by improving the quality of the product, which would increase the variable cost of the unit by £1.50 per unit.

Required:

(a) Write brief notes on your understanding of fixed, variable and semi-variable costs (P5.1)
(b) For each proposal calculate: (P5.2, P5.3)

i. the break-even position in units and in value terms;
ii. the number of units required to be sold in order to meet the profit target

Specification of Assessment

•   Present your work in one business report style which should include table of contents, reference list, foot or end notes and appendices if any
•   Include the reference code of this assignment on your assignment submission front page.
•   Each page must be numbered at the bottom right hand side.
•   Ensure the following information is in the footer on every page:
o   Your name
o   The production date of your submission
o   The code number of your assignment brief
o   The page number
•   Spell-check the document and make sure there are no grammatical errors.
•   Complete all the tasks.
•   Produce clear specific reasoning and arguments in support of your answers.
•   Submit your work in a single work processed document of not more than 5000 words for all Learning Outcomes. This word limit is only for guidelines, and is not applied to grading.
•   You must include a bibliography at the end to show where your information was sourced.
•   Your sources must be identified using the Harvard referencing system. The words used in your bibliography will not be included in your word count.

Achievement of a pass grade
A pass grade is achieved by meeting all the requirements defined in the assessment criteria for each individual unit.
Achievement of a merit or distinction grade
All the assessment criteria and merit grade descriptors need to be completed within a unit to achieve a merit grade.
All the assessment criteria, merit and distinction grade descriptors must be completed within a unit to achieve a disti

Students need to achieve all the assessment criteria for a ‘Pass’

All Assessment Criteria = Pass
All Assessment Criteria + All Merit descriptors = Merit
All Assessment Criteria + All Merit descriptors + All Distinction descriptors = Distinction

Any work that does not meet the minimum requirement for pass will be have to be re-submitted.
Grade Descriptors   Indicative Characteristics   Contextualised Grade Guidance
MERIT
M1
Identify and
apply strategies
to find appropriate
solutions.   •   effective judgements have been made
•   complex problems with more than one variable have been explored
•   an effective approach to study and research has been applied   Use of appropriate formula and provide illustration of the approach used to find solution to problems
M2
Select / design and
apply appropriate
methods/techniques
•   relevant theories and techniques have been applied
•   a range of methods and techniques have been applied
•   a range of sources of information has been used
•   the selection of methods and techniques/sources has been justified
•   the design of methods/ techniques has been justified
•   complex information/data has been synthesised and processed
•   appropriate learning methods/techniques have been applied   Learners need to demonstrate that they have use a range of sources of information throughout the completion of their assignment. This will be evidenced by the appropriate use of the Harvard referencing system in-text and the reference list
M3
Present and
communicate
appropriate findings.
•   the appropriate structure and approach has been used
•   coherent, logical development of principles/concepts for the intended audience
•   a range of methods of presentation have been used and technical language has been accurately used
•   communication has taken place in familiar and unfamiliar contexts
•   The communication is appropriate for familiar and unfamiliar audiences and appropriate media have been used.   The structure of the overall assignment should be appropriate with the required text font and size, clear paragraphs. Answer should be presented in appropriate format as stipulated in questions.

DISTINCTION
D1
Use critical
reflection to
evaluate own
work and justify
valid
conclusions   •   conclusions have been arrived at through synthesis of ideas and have been justified
•   the validity of results has been evaluated using defined criteria
•   self-criticism of approach has taken place
•   realistic improvements have been proposed against defined characteristics for success   Conclusions have been arrived at through synthesis of ideas and have been justified
D2
Take
Responsibility
for managing
and organising
activities   •   autonomy/independence has been demonstrated
•   substantial activities, projects or investigations have been planned, managed and organised
•   activities have been managed
•   the unforeseen has been accommodated
•   the importance of interdependence has been recognised and achieved   Autonomy/ independence has been demonstrated throughout the assessment. Assignment deadlines have been met (All ACs)
D3
Demonstrate
convergent /
lateral / creative
thinking   •   ideas have been generated and decisions taken
•   self-evaluation has taken place
•   convergent and lateral thinking have been applied
•   problems have been solved
•   innovation and creative thought have been applied
•   receptiveness to new ideas is evident
•   effective thinking has taken place in unfamiliar contexts   Results/ recommendations following the application of model, are valid and are supported with current industry practice examples and/ or own work experience

Any act of plagiarism and collusion will be seriously dealt with according to the regulations. In this context the definition and scope of plagiarism are presented below:

‘Plagiarism occurs when a student misrepresents, as his/her own work, the work, written or otherwise, of any other person (including another student) or of any institution. Examples of forms of plagiarism include :
•   the verbatim (word for word) copying of another’s work without appropriate and correctly presented acknowledgement;
•   the close paraphrasing of another’s work by simply changing a few words or altering the order of presentation, without appropriate and correctly presented acknowledgement;
•   unacknowledged quotation of phrases from another’s work;
•   The deliberate and detailed presentation of another’s concept as one’s own.’
All types of work submitted by students are covered by this definition, including, written work, diagrams, designs, engineering drawings and pictures.

‘Collusion occurs when, unless with official approval (e.g. in the case of group projects), two or more students consciously collaborate in the preparation and production of work which is ultimately submitted by each in an identical, or substantially similar, form and/or is represented by each to be the product of his or her individual efforts. Collusion also occurs where there is unauthorised co-operation between a student and another person in the preparation and production of work which is presented as the student’s own. (ibid)’

All work for assessment must be submitted with a Turnitin Report on plagiarism. The Maximum Turnitin score admissible is 15% (after deduction of 1% & 2% records). Assignments with more that this adjusted 15% score will be automatically referred for reworking and resubmission.

If an extension is necessary for a valid reason, requests can me made using a course work extension request form available from the college. Please note that the lecturers do not have the authority to extend the coursework deadlines and therefore do not ask them to award a coursework extension.

The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick.

Textbooks

Dyson J R – Accounting for Non-Accounting Students (Financial Times/Prentice Hall, 2007) ISBN: 9780273709220