1. Some fixed cost are:
insurance payments, rent/leasing money, mortgage, taxes, management salaries,
and benefits payments.
2. Some variable cost will
be: food cost, beverage cost, utilities, repairs and maintenance, and marketing
3. While they are both great
ideas I think that Loralei’s idea of doing both increase sales and lowering
cost is a superb idea. First they need
to break the breakeven point by having a high guest count to increase sales. “At the breakeven point, operational expenses are exactly
equal to sales revenue. Stated in another way, when sales volume in a business
equals the sum of its total fixed and variable costs, its breakeven point has
been reached.” (Dopson, Lea R. Managerial Accounting for the
Hospitality Industry. Wiley, 09/2008. [The Art Institutes].) Reducing
the cost can also help, by increasing the contribution margin that will also help
make a profit. “for the overall operation is
defined as the dollar amount, after subtracting variable costs from total
sales, that contributes to covering fixed costs and providing for a
profit.” (Dopson, Lea R. Managerial Accounting for the
Hospitality Industry. Wiley, 09/2008. [The Art Institutes].).
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