Break Even Point Computation For Hotel

www.hotelskonsultan.webs.
com
BESTPRACTICE
HOTELBREAKEVENPOINT
Drs.AgusttinusAgusPurwanto,MM
2/11/2009
ThisdocumentispreparedtoanalysisBudgetYear2009beingproposedtoHotelsOwner,theobjectiveto
compute Break even Point is to ensure the Monthly breakdown was objective and achievable. To see
which month is bad performance and best performance. As Director of Finance will be assist Sales &
MarketingtoanalyzebyincreasingandreducingtheRoomRatewhenrequested
Developed by: Drs. Agustinus Agus Purwanto, MM
Page:
www.hotelskonsultan.webs.com
Hotel Room Division

Break-even Point
Page:
BEST PRACTICE
HOTEL BREAK-EVENT POINT
1. Formula
What is hotel break-even point computed by, the hotel is complex in business operation according
to which Departmental Profit we want to compute the Break-even Point will meet the difficutly to
follow Break-Even Point method as following without to know the caracteristic of expenses:
Formula A
BE=FC/ (1-VC %)
BE Break Even Point
FC Fixed Costs
VC Variable Costs
Formula B
BEP = break-even point (units of

production)
TFC = total fixed costs,
VCUP = variable costs per unit of
production,
SUP = selling price per unit of
production
Formula C
1. Break-even point (in units) =
fixed expenses
unit contribution margin
2. Contribution-margin ratio =
unit contribution margin

unit sales price
3. Break-even point (in sales dollars) =
fixed expenses
contribution-margin ratio
Formula D
Classic Spread Sheet from Consolidated

Budget
Other Formula
Still many other formulas like as

Mathematic Equation etc.
Page:
2. Hotel Departmental Profit
In the hotel business has many types of Departmental Profit to follow Uniform System of
Account for Hotel. These departmental profit can be minimized into three profit center as
follow:
a. Room Division Departmental Profit
b. Food and Beverage Division Departmental Profit, and
c. Other Operated Departmental Profit
2.1 Room Divison Departmental Profit
The main core business is services but is not really pure services business, because we also
supply some operation supplies into the room for free to our guests.
Cost and Expenses in the Room Divison Department ussualy categoried as follow:
a. Payroll in this Best Practice is Fixed Cost, in the Consuldated Room Division Budget
appear constant as Fixed Cost
b. Provision in this Best Practice is Fixed Cost, but you can calculate this expenses by
percentage of Sales and then become as Vaiable Cost
c. Other Expenses in this Best Practice can be Fixed Cost or Variable Cost depend how you
calculated in the budget, when is constant every month will be Fixed Cost and when the
expenses based on the room occupancy, total sales or number of guest will categoried as
Variable Cost
If you are not following this method the Break Even Point figures will be big differences
when you are computing with another FORMULA.
2.2 Food and Beverage Division Departmental Profit
The main core business is not services, but combination between service and production /
manufacturer, so you have to use different Formula to Food and Beverage Departmental
Profit. Which will be analysis on the next Best Practice.
Cost and Expenses in the Food and Beverage Departmental Profit different with Room
Division Departmental Profit. This Cost and Expensres ussualy categoried as follow:
a. Payroll in this Best Practice is Fixed Cost, in the Consuldated Food and Beverage
Departmental Budget appear constant as Fixed Cost
b. Cost of Sales In Food and Beverage Departmental Profit has Cost of Sales but in the
Room Departmental Profit is not, this expense in this Best Practice as Variable Cost
c. Provision in this Best Practice is Fixed Cost, but you can calculate this expenses by
d. Other Expenses in this Best Practice can be Fixed Cost or Variable Cost depend how you
expenses based on total sales or number of cover will categoried as Variable Cost
Page:
2.3 Other Operated Departmental Profit
The main core business is also not really service, this is combined between service and
production, the formula can use the same with Food and Beverage Division Department Profit.
When you are using Classic Spread Sheet Break-even Point Analysis will some expenses
different classification. Mean in the Food and Beverage Departmental Profit as Variable Cost
but in the Other Operated Departmental Profit as Fixed Cost.
3. Classic Spread Sheet Break-even Point Analysis for Room Division

The Classic Spread Sheet Break-even Point Analysis is the easier way to calculate Room
Divison Departmental Profit Break-even Point. This method can be prepared by following
steps:
a. STEP ONE
Prepare Consulidated Operating Budget Summary and Monthly
b. STEP TWO
Move the expenses to Fixed Cost for constant expenses and move to Variable Cost for
non constant expenses, all exepses calculated based on Occupied Room, Number
Guest, Number Cover or Percentage of Sales
c. STEP THREE
Calculate the Contribution Margin the simple formula as bellow:
(S VC)/S
Sales Variable Cost divided by Sales
d. STEP FOUR
Calculate the Break-even Sales Volume the simple formula as below:
FC/CM
Fixed Cost divided by Contribution Margin
e. STEP FIVE
Do calculation the Break-even Point Analysis by using the Classic Spread Sheet as
sample
f.
STEP SIX
Do test with one of the formula as above or other furmula do you have
Page:
Example: MONTHLY BREAKDOWN OF CONSOLIDATED ROOM DIVISION BUDGET
Based on Proposed Budget 2009
BUDGET FOR 2009 - MONTH BY MONTH
Yearly Total
Break-Even Analysis
% of
Sales
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
239,986.00
226,089.00
210,177.00
244,581.00
306,720.00
327,720.00
365,324.00
362,475.00
325,616.00
254,896.00
253,186.00
273,228.00
$3,389,998.00
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
19,718.37
$236,620.50
6.98%
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
1,550.00
$18,600.00
0.55%
In House Movie/Satellite TV
230.00
230.00
230.00
230.00
230.00
230.00
230.00
230.00
230.00
230.00
230.00
230.00
$2,760.00
0.08%
Music Entertainment
250.00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
250.00
$3,000.00
0.09%
Reservation Expenses
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
$900.00
0.03%
266.67
266.67
266.67
266.67
266.67
266.67
266.67
266.67
266.67
266.67
266.67
266.67
$3,200.00
0.09%
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
12,393.85
$148,726.15
4.39%
Human Resources
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
1,960.78
$23,529.41
0.69%
Sales & Marketing
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
6,907.19
$82,886.30
2.45%
P.O.M.E.C
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
3,592.61
$43,111.33
1.27%
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
22,800.00
273,600.00
8.07%
764.00
764.00
764.00
764.00
764.00
764.00
764.00
764.00
764.00
764.00
764.00
764.00
$9,168.00
0.27%
Depreciation
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
39,520.00
$474,240.00
13.99%
Total Fixed Costs
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
$1,320,341.69
38.95%
Descriptions
Sales
Nov-09
Dec-09
Fixed Costs
Payroll
Provision
Subscription - Newspaper
Administration & General
Interest Charges
Other Fixed Charges
Page:
Variable Costs
T/A Commission
540.06
414.36
678.90
730.06
471.44
542.16
762.40
569.70
452.98
570.98
746.93
569.62
$7,049.58
0.21%
Flower & Decorations
669.03
835.44
114.79
591.77
507.76
80.12
1,063.45
496.81
386.10
348.25
255.97
321.75
$5,671.24
0.17%
Guest Supplies - F & B
1,853.42
1,768.94
1,758.42
2,030.68
2,618.88
2,646.66
3,287.18
2,862.61
1,960.76
2,266.48
2,211.38
2,056.24
$27,321.65
0.81%
Guest Supplies - Amenities
3,774.11
3,267.14
2,302.50
2,893.18
3,465.25
4,706.52
4,923.64
4,289.34
6,294.50
3,795.38
3,564.17
3,146.36
$46,422.10
1.37%
524.95
428.82
(76.12)
113.78
569.03
890.43
834.36
320.53
1,361.89
551.78
435.15
836.98
$6,791.57
0.20%
3,578.73
3,353.71
3,307.23
4,035.15
4,843.78
5,313.00
6,307.01
5,005.79
5,630.77
4,605.13
4,360.30
3,919.69
$54,260.29
1.60%
361.87
360.74
383.48
384.01
360.31
364.88
383.09
367.77
359.97
367.92
386.73
361.74
$4,442.49
0.13%
Printing & Stationery
1,132.69
1,136.84
1,101.48
1,137.57
1,693.84
1,397.94
1,929.05
1,853.35
2,277.12
1,378.54
1,411.59
1,437.46
$17,887.47
0.53%
Cleaning Supplies & Tools
1,521.84
1,489.94
1,452.48
1,598.45
2,195.18
2,020.74
2,626.22
2,354.40
1,088.17
1,891.84
1,880.31
1,832.26
$21,951.85
0.65%
Entertainment
1,671.88
1,470.33
2,434.81
1,937.67
1,804.79
1,397.83
2,149.47
2,387.38
207.69
1,753.67
2,402.20
2,071.10
$21,688.82
0.64%
472.10
387.72
635.26
638.19
441.14
507.31
633.14
533.08
423.86
534.28
652.93
470.10
$6,329.11
0.19%
1,021.84
989.94
452.48
848.45
1,445.18
1,520.74
1,126.22
1,354.40
1,088.17
1,891.84
1,880.31
1,832.26
$15,451.85
0.46%
193.94
159.28
260.97
262.17
181.22
208.40
260.09
218.99
174.12
219.48
268.23
193.12
$2,600.00
0.08%
7,560.18
6,550.61
10,196.03
8,781.62
7,339.83
7,318.03
9,403.26
10,139.29
4,491.62
7,607.79
9,591.61
7,870.43
$96,850.27
2.86%
Human Resources
1,650.91
1,369.34
2,206.28
1,893.35
1,566.33
1,559.11
1,949.78
2,201.35
950.65
1,593.72
2,100.34
1,819.13
$20,860.30
0.62%
Sales & Marketing
6,980.17
6,820.66
7,682.28
7,350.93
6,995.86
6,983.66
7,499.89
7,681.00
6,264.44
7,150.01
7,702.12
7,199.22
$86,310.24
2.55%
P.O.M.E.C
21,888.00
19,706.39
24,273.37
22,720.16
24,899.02
25,957.27
30,433.83
31,363.97
22,046.48
23,159.12
26,362.42
24,314.27
$297,124.32
8.76%
Management Fees
11,225.11
9,952.46
11,831.75
11,543.21
14,076.06
15,026.07
17,729.37
18,236.86
13,192.61
12,085.93
13,545.64
13,065.34
$161,510.42
7.84%
Total Variable Costs
66,620.81
60,462.65
70,996.38
69,490.39
75,474.91
78,440.86
93,301.47
92,236.64
68,651.90
71,722.15
79,758.32
73,317.08
$900,523.57
26.56%
Income from Operations
63,336.72
55,597.87
29,152.15
65,062.14
121,216.61
139,250.66
161,994.06
160,209.89
146,935.63
73,095.38
63,399.21
89,882.45
1,169,132.76
34.49%
Guest Relocations
Laundry Operation - Linen
Laundry Uniform
Telephone & Fax

Transportation
Other Operating Supplies
Page:
Analysis
72.24%
73.26%
66.22%
71.59%
75.39%
76.06%
74.46%
74.55%
78.92%
71.84%
68.50%
73.17%
73.44%
152,310.24
150,194.87
166,154.27
153,696.84
145,940.11
144,651.22
147,767.33
147,582.94
139,424.27
153,152.19
160,629.89
150,381.28
1,797,952.05
53.04%
87,675.76
75,894.13
44,022.73
90,884.16
160,779.89
183,068.78
217,556.67
214,892.06
186,191.73
101,743.81
92,556.11
122,846.72
1,592,045.95
46.96%
6,200
5,200
6,200
6,000
6,200
6,000
6,200
6,200
6,000
6,200
6,000
6,200
72,600
2,660
$90.22
2,566
$88.09
2,479
$88.09
2,652
$84.79
3,581
$92.22
3,959
$85.64
4,198
$82.78
4,165
$87.02
3,984
$87.03
2,929
$81.73
2,874
$87.02
3,101
$88.08
39,148
86.00
Average Room Rate
$90.22
$88.09
$88.09
$84.79
$92.22
$85.64
$82.78
$87.02
$87.03
$81.73
$87.02
$88.08
$86.00
Breakeven Room Night
1,689
27.2%
1,705
1,887
1,813
1,583
1,690
1,786
1,696
1,602
1,874
1,846
1,708
20,907
32.8%
30.4%
30.2%
25.5%
28.2%
28.8%
27.4%
26.7%
30.2%
30.8%
27.5%
28.8%
Contribution Margin
Break-Even Sales Volume
Sales Volume Above BreakEven
Room Available
Room Sold
Average Room Rate
Analysis
% Occupancy Breakeven
Page:
4. TEST USE FORMULA A
We do test the Classic Spread Sheet Break-even Point with the formula A as per page 1
with the formula as bellow:
BE=FC/ (1-VC %)
BE Break Even Point
FC Fixed Costs
VC Variable Costs
We do test for January 2009 for Room Division as follow:

JANUARY 2009 BREAK-EVEN POINT:
Fixed Cost:
$110,028.47
VC%:
27.760290%
Solution on Break-even point of January 2009 Room Division as bellow:
BE = $110,028.47/(1-27.760290%)
BE = $110,028.47/72.2397%
BE = $110,028/0.722397
BE = $152,310.24 compare with Classic Spread Sheet is $ 152,310.24
We do test for Total 2009 for Room Division as follow:

TOTAL 2009 BREAK-EVEN POINT:
Fixed Cost:
$1,320,341.69
VC%:
26.564132%
Solution on Break-even point of Total 2009 Room Division as bellow:
BE = $1,320,341.69/(1-26.564132%)
BE = $1,320,341.69/73.4359%
BE = $1,320.341.69/0.734359
BE = $1,797,952.28 compare with Classic Spread Sheet is $ 1,797,952.28
Page:
5. TEST USE EQUATION
The result of Classic Spread Sheet Break-even Point also can be proved by using Equation
Method as following:
Sales = Variable Cost + Fixed Cost + Profit
To prove January 2009 Result of Classic Spread Sheet Break-even Point for Room Division:
Information we got as follow:
Average Room Rate = $90.22
Sales = $236,986
Room Sold = 2660
Fixed Cost = $110,028.47
Variable Cost = $66,620.81
Proved:
Variable Cost per Occupied = $66,620.81 / 2660 = $ 25.045
$90.22Q = $25.045Q + $110,028.47 + $0
65.175Q = 110,028.47
Q = 1,688.21 ronded 1,689 R/N compare with Classic Spread Sheet BEP 1,689 R/N
You can do test the other months and in Yearly Total with this Equation Method
Page:
6. BREAKEVEN CHART
This is Breakeven Chart for January 2009, you are free to do for another month within the
Classic Spread Sheet Break-even Point:
Breakeven Chart
350,000.00
300,000.00
Money
250,000.00
200,000.00
150,000.00
100,000.00
50,000.00
-
Operating Surplus
Variable Costs
Fixed Costs
Business Revenue
Total Costs
(110,028.47)
563.00
1,126.00
1,689.00
2,252.00
2,815.00
3,378.00
(73,335.18)
(36,641.89)
51.40
36,744.69
73,437.98
110,131.27
14,100.57
28,201.14
42,301.71
56,402.28
70,502.85
84,603.42
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
110,028.47
50,793.86
101,587.72
152,381.58
203,175.44
253,969.30
304,763.16
110,028.47
124,129.04
138,229.61
152,330.18
166,430.75
180,531.32
194,631.89
Page:
10
Room Sold
Hotel F & B Division

Break-even Point
Page:
11
7. Hotel F & B Departmental Profit
1.1. Food and Beverage Payroll
Payroll in this Best Practice is Fixed Cost, in the Consuldated Food and Beverage
Departmental Budget appear constant as Fixed Cost
1.2. Food and Beverage Cost of Sales
Cost of Sales In Food and Beverage Departmental Profit has Cost of Sales but in the Room
Departmental Profit is not, this expense in this Best Practice as Variable Cost
1.3. Provision of Food and Beverage
Provision in this Best Practice is Fixed Cost, but you can calculate this expenses by
1.4. Other Expenses
Other Expenses in this Best Practice can be Fixed Cost or Variable Cost depend how you are
You are never can to compute by using formula directly without to identify the expenses caracter,
because the Fixed Cost such as Administration, Human Resources, Sales & Marketing and
Property Operation & Energy Cost (P.O.M.E.C) share with Room Division and Other Operated
Department. In this case you can splite based on Revenue percentage.
Your operation Break-even Point will be wrong when you dont split the above Expenses, also
you will to find difficulties when you are not moving your expenses into the two categories
expense i.e., Fixed Cost and Variable Cost.
Do not confusing with Cost of Sales, because this expenses should be categoried by Variable
Cost because these expenses will be increase or decrease paralel to the Food and Beverage
Sales.
Remember to compute Break-even Point, you only need Fixed Cost and Variable Cost. The Cost
of Sales is the presentation in the Profit and Loss format.
So, to get the Calculation you can follow the steaps as bellow:
Page:
12
8. Classic Spread Sheet Break-even Point Analysis
The Classic Spread Sheet Break-even Point Analysis is the easier way to calculate Food and
Beverage Divison Departmental Profit Break-even Point. This method can be prepared by
following steps:
a. STEP ONE
b. STEP TWO
non constant expenses, all exepses calculated based on Number Guest, Number Cover or
Percentage of Sales
c. STEP THREE
(S VC)/S
d. STEP FOUR
FC/CM
e. STEP FIVE
sample
f.
STEP SIX
Page:
13
Example: MONTHLY BREAKDOWN OF CONSOLIDATED FOOD AND BEVERAGE DIVISION BUDGET
Break-Even Analysis
Year 1
% of
Sales
1/09
2/09
3/09
4/09
5/09
6/09
7/09
8/09
9/09
10/09
11/09
12/09
134,835.30
114,123.67
188,093.22
137,513.67
132,954.15
133,924.07
168,622.04
183,069.25
83,046.27
142,083.21
185,996.77
145,738.38
$1,750,000
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
17,704.57
$212,455
12.14%
Provision
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
1,950.00
$23,400
1.34%
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
6,400.77
$76,809
4.39%
Human Resources
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
1,012.64
$12,152
0.69%
Sales & Marketing
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
3,567.20
$42,806
2.45%
P.O.M.E.C
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
1,855.39
$22,265
1.27%
Depreciation
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$20,410
$244,920
14.00%
Total Fixed Costs
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$52,901
$634,807
36.27%
Cost of Sales
38,790.29
32,757.48
53,989.27
39,020.77
38,162.44
38,440.86
48,400.38
52,547.25
23,837.18
40,782.81
53,387.56
41,831.97
$501,948
28.68%
Kitchen Fuel
1,884.84
1,431.42
2,479.78
2,068.20
1,642.43
1,968.57
2,430.12
2,318.75
1,303.33
1,960.72
2,530.50
1,879.23
$23,898
1.37%
460.58
581.27
750.80
242.32
676.75
326.70
406.91
778.86
115.88
547.76
723.95
736.41
$6,348
0.36%
2,666.00
2,064.00
3,400.00
3,234.00
2,390.00
2,671.00
3,409.00
3,247.00
1,926.00
2,793.00
3,495.00
2,725.00
$34,020
1.94%
609.66
599.64
986.39
547.69
718.46
582.85
751.41
1,015.01
271.23
639.35
900.37
715.96
$8,338
0.48%
1,153.04
954.07
1,622.75
1,195.61
1,112.18
1,173.34
1,466.74
1,570.56
711.03
1,202.41
1,595.00
1,211.65
$14,968
0.86%
580.20
617.95
1,002.09
524.07
748.78
534.10
700.99
1,058.03
203.89
608.78
883.91
718.21
$8,181
0.47%
Decorations
172.41
112.18
201.41
225.44
124.61
186.89
226.40
175.83
139.19
178.21
219.85
156.89
$2,119
0.12%
Sales
Fixed Costs
Payroll
Variable Costs
Laundry Linen
Music Entertainment
Cleaning Supplies
Guest Supplies F & B
Page:
14
Menu & Wine List
47.88
31.15
55.93
62.61
34.61
51.90
62.88
48.83
38.66
49.49
61.06
43.57
$589
0.03%
Spoilage
61.91
40.28
72.33
80.96
44.75
67.11
81.30
63.14
49.98
63.99
78.95
56.34
$761
0.04%
Telephone & Fax
86.28
56.14
100.79
112.81
62.36
93.52
113.29
87.99
69.66
89.18
110.02
78.51
$1,061
0.06%
Laundry Uniforms
663.54
675.88
1,097.12
633.44
808.57
625.28
810.81
1,146.99
263.57
697.86
987.64
792.23
$9,203
0.53%
F & B Promotions
208.79
135.85
243.91
273.01
150.91
226.32
274.17
212.93
168.57
215.81
266.24
189.99
$2,567
0.15%
21.01
13.67
24.55
27.47
15.19
22.78
27.59
21.43
16.96
21.72
26.79
19.12
$258
0.01%
106.90
69.55
124.88
139.78
77.26
115.88
140.38
109.02
86.31
110.50
136.32
97.28
$1,314
0.08%
Entertainment
61.88
40.26
72.28
80.91
44.72
67.07
81.25
63.10
49.96
63.96
78.90
56.31
$761
0.04%
Miscellaneous
75.49
49.07
87.90
98.40
54.72
80.98
98.30
76.42
60.26
77.47
95.81
67.81
$923
0.05%
3,904.43
3,383.04
5,265.71
4,535.24
3,790.63
3,779.38
4,856.29
5,236.41
2,319.68
3,929.02
4,953.56
4,064.66
$50,018
2.86%
Human Resources
852.61
707.19
1,139.43
977.82
808.92
805.20
1,006.96
1,136.88
490.96
823.07
1,084.71
939.49
$10,773
0.62%
Sales & Marketing
3,604.89
3,522.51
3,967.49
3,796.37
3,612.99
3,606.69
3,873.30
3,966.83
3,235.25
3,692.60
3,977.74
3,718.02
$44,575
2.55%
11,304.00
10,177.31
12,535.92
11,733.77
12,859.04
13,405.56
15,717.47
16,197.84
11,385.85
11,960.47
13,614.80
12,557.04
$153,449
8.77%
$67,317
$58,020
$89,221
$69,611
$67,940
$68,832
$84,936
$91,079
$46,743
$70,508
$89,209
$72,656
$876,071
50.06%
$14,618
$3,203
$45,972
$15,002
$12,113
$12,191
$30,786
$39,090
($16,598)
$18,674
$43,888
$20,182
$239,122
13.66%
Bar Supplies
Banquet Expenses
P.O.M.E.C
Page:
15
Income from Operations Analysis

Contribution Margin
Sales Volume Above Break-Even
Guest
Cover
Capture Rate
43.71%
50.38%
52.04%
50.15%
49.94%
$105,277
$121,015
$105,013
$101,659
$105,492
$1,271,170
72.64%
$77,792
($37,969)
$37,071
$84,338
$40,246
$478,830
27.36%
8,274
7,827
5,754
5,691
6,077
76,898
50.07%
49.16%
52.57%
49.38%
48.90%
48.60%
49.63%
50.25%
$105,643
$107,608
$100,637
$107,132
$108,182
$108,841
$106,591
$29,192
$6,516
$87,456
$30,382
$24,772
$25,083
$62,031
5,191
4,885
4,847
5,180
7,076
7,728
8,368
11,063
10,030
15,033
12,814
11,928
11,577
14,785
15,862
7,512
10,809
10,910
11,700
144,023
213.1%
205.3%
310.2%
247.4%
168.6%
149.8%
176.7%
191.7%
96.0%
187.9%
191.7%
192.5%
187.3%
$12.19
$11.38
$12.51
$10.73
$11.15
$11.57
$11.40
$11.54
$11.06
$13.14
$17.05
$12.46
$12.15
8,668
9,457
8,043
9,983
9,706
9,409
9,346
9,122
10,946
7,989
5,963
8,469
104,616
167.0%
193.6%
165.9%
192.7%
137.2%
121.7%
111.7%
110.2%
139.9%
138.8%
104.8%
139.4%
136.0%

Average Room Rate
Breakeven Cover
Breakeven Capture Rate
Page:
16
We do test the Classic Spread Sheet Break-even Point with the formula A as per page 1
with the formula as bellow:
BE=FC/ (1-VC %)
BE Break Even Point
FC Fixed Costs
VC Variable Costs
We do test for January 2009 Food and Beverage Division as follow:

Fixed Cost:
$52,900.58
VC%:
49.925%
Solution on Break-even point of January 2009 Food and Beverage Division as bellow:
BE = $52,900.58/(1-49.925%)
BE = $52,900.58/50.07492%
BE = $52,900/0.5007492
We do test for Total 2009 as follow:

Fixed Cost:
$634,806.98
VC%:
50.061217%
Solution on Break-even point of Total 2009 Food and Beverage Division as bellow:
BE = $634,806.98/(1-50.0612%)
BE = $634,806.98/49.938783%
BE = $634,806.94/0.49938783
BE = $1,271,170.30 compare with Classic Spread Sheet is $ 1,271,170.29
Page:
17
The result of Classic Spread Sheet Break-even Point also can be proved by using Equation
Method as following:
To prove January 2009 Result of Classic Spread Sheet Break-even Point:

Average Per Cover = $12.19
Sales = $134,835.30
Cover = 11,063
Fixed Cost = $52,900.58
Proved:
Variable Cost per Cover = $67,316.63 / 11,063 = $ 6.084844
$12.19Q = $6.085Q + $52,900.58 + $0
6.105Q = 52,900.58
Q = 8,665.12 ronded 8,666 Covers compare with Classic Spread Sheet BEP 8,668 Cover
Page:
18
11.
BREAKEVEN CHART FOR FOOD AND BEVERAGE DIVISION
Breakeven Chart
200,000.00
150,000.00
Money
100,000.00
50,000.00
(50,000.00)
(100,000.00)
Fixed Cost
Variable Cost
2,167
4,334
6,501
8,668
10,835
13,002
52,900.58
52,900.58
52,900.58
52,900.58
52,900.58
52,900.58
52,900.58
13,185.86
26,371.71
39,557.57
52,743.43
65,929.29
79,115.14
Operating Surplus
(52,900.58)
(39,675.15)
(26,449.71)
(13,224.28)
1.15
13,226.59
26,452.02
Total Cost
52,900.58
66,086.44
79,272.30
92,458.15
105,644.01
118,829.87
132,015.72
26,411.29
52,822.58
79,233.87
105,645.16
132,056.45
158,467.74
Revenue
Cover Food and Beverage
Page:
19
Hotel Minor Operated

Department
Break-even Point
Page:
20
12. Hotel Minor Operated Departmental Profit
12.1 Minor Operated Department Payroll
Payroll in this Best Practice is Fixed Cost, in the Consuldated Minor Operated Departmental
Budget appear constant as Fixed Cost
12.2 Minor Operated Department Cost of Sales

Cost of Sales In Minor Operated Departmental Profit also has Cost of Sales but in the
Room Departmental Profit is not, this expense in this Best Practice as Variable Cost
12.3 Provision of Minor Operated Department

Provision in this Best Practice is Fixed Cost, but you can calculate this expenses by
12.4 Other Expenses

Other Expenses in this Best Practice can be Fixed Cost or Variable Cost depend how you
are calculated in the budget, when is constant every month will be Fixed Cost and when the
You are never can to compute the Minor Operated Department by using formula directly without
to identify the expenses caracter, because the Fixed Cost such as Administration, Human
Resources, Sales & Marketing and Property Operation & Energy Cost (P.O.M.E.C) share with
Room Division and Food and Beverage Division. In this case you can splite based on Revenue
percentage.
Same with Room Division and Food Beverage Division, Other Operated Department Break-even
Point will be wrong when you dont split the above Expenses, also you will to find difficulties when
you are not moving your expenses into the two categories expense i.e., Fixed Cost and Variable
Cost.
Again do not confusing with Cost of Sales, because this expenses should be categoried by
Variable Cost because these expenses will be increase or decrease paralel to the Minor
Operated Department Sales.
Remember to compute Break-even Point, you only need Fixed Cost and Variable Cost. The Cost
of Sales is the presentation in the Profit and Loss format only.
Page:
21
13. Classic Spread Sheet Break-even Point Analysis
The Classic Spread Sheet Break-even Point Analysis is the easier way to calculate Minor
Operated Departmental Profit Break-even Point. This method can be prepared by following steps:
a. STEP ONE
b. STEP TWO
non constant expenses, all exepses calculated based on Number Guest, Percentage of
Sales
c. STEP THREE
(S VC)/S
d. STEP FOUR
FC/CM
e. STEP FIVE
sample
f.
STEP SIX
Page:
22
Example: MONTHLY BREAKDOWN OF CONSOLIDATED MINOR OPERATED DEPARTMENT BUDGET
Break-Even Analysis
Year 1
% of
Sales
1/09
2/09
3/09
4/09
5/09
6/09
7/09
8/09
9/09
10/09
11/09
12/09
32,854.00
28,628.00
45,141.00
37,098.00
32,719.00
32,951.00
41,295.00
44,769.00
21,540.00
34,913.00
45,426.00
35,791.00
$433,125.00
Payroll
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
7,899.00
$94,787.97
21.88%
Provision
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
1,196.00
$14,352.00
3.31%
Cleaning Supplies
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
25.00
$300.00
0.07%
Guest Supplies FB
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
75.00
$900.00
0.21%
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
1,590.00
$19,080.00
4.41%
Human Resources
251.55
251.55
251.55
251.55
251.55
251.55
251.55
251.55
251.55
251.55
251.55
251.55
$3,018.58
0.70%
Sales & Marketing
886.12
886.12
886.12
886.12
886.12
886.12
886.12
886.12
886.12
886.12
886.12
886.12
$10,633.44
2.46%
P.O.M.E.C
460.89
460.89
460.89
460.89
460.89
460.89
460.89
460.89
460.89
460.89
460.89
460.89
$5,530.73
1.28%
Depreciation
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$5,070
$60,840.00
14.05%
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
$209,442.71
48.36%
6,120.54
5,010.32
8,908.09
6,962.60
6,004.34
6,055.41
7,883.52
8,644.07
3,376.19
6,486.13
8,799.38
6,679.82
$80,930
18.69%
Laundry Uniforms
111.07
105.36
129.49
111.58
111.19
108.33
470.16
595.67
87.99
110.99
127.89
116.18
$2,186
0.50%
Telephone & Fax
44.34
42.10
49.95
46.03
44.10
44.20
47.88
49.41
38.81
45.07
49.73
45.46
$547
0.13%
90.18
83.14
107.87
95.53
89.44
89.76
101.36
106.19
72.75
92.49
107.16
93.71
$1,130
0.26%
Sales
Fixed Costs
Total Fixed Costs

Variable Costs
Cost of Sales
Page:
23
Laundry Supplies
90.00
75.00
119.00
120.00
83.00
95.00
119.00
100.00
80.00
100.00
123.00
88.00
$1,192
0.28%
1,233.42
973.46
1,967.00
1,480.15
1,219.04
1,235.15
1,436.25
1,538.16
947.69
1,350.05
1,966.27
1,398.33
$16,745
3.87%
53.00
54.00
55.00
56.00
55.00
54.00
53.00
53.00
54.00
53.00
54.00
53.00
$647
0.15%
969.89
840.37
1,308.04
1,126.59
941.62
938.83
1,206.34
1,300.76
576.23
976.00
1,230.50
1,009.69
$12,425
2.87%
Human Resources
211.79
175.67
283.04
242.90
200.94
200.02
250.14
282.41
121.96
204.46
269.45
233.38
$2,676
0.62%
Sales & Marketing
895.48
875.02
985.56
943.05
897.49
895.93
962.16
985.39
803.66
917.27
988.10
923.58
$11,073
2.56%
2,808.00
2,528.12
3,114.02
2,914.76
3,194.28
3,330.04
3,904.34
4,023.67
2,828.33
2,971.07
3,382.02
3,119.26
$38,118
8.80%
12,627.71
10,762.57
17,027.06
14,099.19
12,840.46
13,046.68
16,434.14
17,678.74
8,987.60
13,306.52
17,097.50
13,760.42
$167,668.60
38.71%
2,772.73
411.87
10,660.38
5,545.26
2,424.98
2,450.76
7,407.30
9,636.71
(4,901.16)
4,152.92
10,874.94
4,577.02
$56,013.69
12.93%
61.56%
62.41%
62.28%
61.99%
60.76%
60.41%
60.20%
60.51%
58.27%
61.89%
62.36%
61.55%
61.29%
28,350.20
27,968.01
28,024.21
28,153.28
28,727.62
28,893.84
28,991.15
28,843.51
29,950.43
28,202.48
27,987.56
28,355.14
$341,731.73
78.90%
4,503.80
659.99
17,116.79
8,944.72
3,991.38
4,057.16
12,303.85
15,925.49
(8,410.43)
6,710.52
17,438.44
7,435.86
$91,393.27
21.10%
5,191
4,885
4,847
5,180
7,076
7,728
8,368
8,274
7,827
5,754
5,691
6,077
76,898
$6.33
$5.86
$9.31
$7.16
$4.62
$4.26
$4.93
$5.41
$2.75
$6.07
$7.98
$5.89
$5.63
Laundry Operation Linen

Miscellaneous
P.O.M.E.C

Contribution Margin
Sales Volume Above BreakEven
Guest
Average Price for MOD
Breakeven Guest
Breakeven Capture Rate
4,479
4,772
3,009
3,931
6,213
6,776
5,875
5,331
10,883
4,648
3,506
4,814
60,672
86.3%
97.7%
62.1%
75.9%
87.8%
87.7%
70.2%
64.4%
139.1%
80.8%
61.6%
79.2%
78.9%
Page:
24
We do test the Classic Spread Sheet Break-even Point with the formula A as per page 1 with the
formula as bellow:
BE=FC/ (1-VC %)
BE Break Even Point
FC Fixed Costs
VC Variable Costs
We do test for January 2009 Minor Operated Department as follow:

Fixed Cost:
$17,453.56
VC%:
38.43585%
Solution on Break-even point of January 2009 Minor Operated Department as bellow:
BE = $17,453.56/(1-38.43585%)
BE = $17,453.56/61.56415%
BE = $17.453.56/0.6156415
We do test for Total 2009 Minor Operated Department as follow:

Fixed Cost:
$209,442.71
VC%:
38.711365%
Solution on Break-even point of Total 2009 Minor Operated Department as bellow:
BE = $209,442.71/(1-38.711365%)
BE = $209,442.71/61.288634%
BE = $209,442.71/0.61288634
Page:
25
The result of Classic Spread Sheet Break-even Point also can be proved by using Equation Method as
following:
To prove January 2009 Minor Operated Department Result of Classic Spread Sheet Break-even Point:
Average Per Guest = $6.33
Sales = $32,854.00
No Of Guest = 5,191
Fixed Cost = $17,453.56
Proved:
Variable Cost per Guest = $12,627.71 / 5,161 = $ 2.4326
$6.33Q = $2.4326Q + $17,453.56 + $0
3.8974Q = 17,453.56
Q = 4,478.26 ronded 4,479 Covers compare with Classic Spread Sheet BEP 4,479 Cover
Page:
26
16.
BREAKEVEN CHART FOR MINOR OPERATED DEPARTMENT
Breakeven Chart
50,000.00
40,000.00
30,000.00
Money
20,000.00
10,000.00
(10,000.00)
(20,000.00)
(30,000.00)
Fixed Cost
Variable Cost
1,120
2,240
3,360
4,479
5,599
6,719
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
17,453.56
2,724.53
5,449.06
8,173.59
10,895.69
13,620.22
16,344.75
Operating Surplus
(17,453.56)
(13,089.58)
(8,725.59)
(4,361.61)
(1.52)
4,362.46
8,726.45
Total Cost
17,453.56
20,178.09
22,902.62
25,627.15
28,349.25
31,073.78
33,798.31
7,088.51
14,177.03
21,265.54
28,347.73
35,436.24
42,524.76
Revenue
Number Guest of Minor Operated Department
Page:
27
Hotel Operation
Break-even Point
Page:
28
17. HOTEL OPERATION BREAK-EVEN PINT
To compute Hotel Operation Break-event Point can do just added all Sales Volume Break-even Point or by
using Break-even Analysis with Multiple Products as bellow:
Example Sales Break-even Point for January December 2009

Description
Room Division
F & B Division
Minor Op. Dept.
Total Sales BEP
Jan-09
152,310.24
105,642.86
28,350.20
286,303.30
Feb-09
150,194.87
107,607.96
27,968.01
285,770.84
Mar-09
166,154.27
100,637.10
28,024.21
294,815.58
Apr-09
153,696.84
107,131.59
28,153.28
288,981.71
May-09
145,940.11
108,182.42
28,727.62
282,850.15
Jun-09
144,651.22
108,840.61
28,893.84
282,385.67
Description
Room Division
F & B Division
Minor Op. Dept.
Total Sales BEP
Jul-09
147,767.33
106,591.24
28,991.15
283,349.72
Aug-09
147,582.94
105,277.25
28,843.51
281,703.70
Sep-09
139,424.27
121,015.07
29,950.43
290,389.77
Oct-09
153,152.19
105,012.66
28,202.48
286,367.33
Nov-09
160,629.89
101,658.55
27,987.56
290,276.00
Dec-09
150,381.28
105,492.07
28,355.14
284,228.49
Remember, the hotel operation is unique compare to manufactures or other business and we now about
Break-even Analysis with Multiple Products is far different under than the above break-even point. Let
we try to compute
HOTEL XYZOTEL XYZ

Description
Sales
Room Division
F & B Division
M.O. D
Total
239,986.00
100.0%
134,835.30
100.0%
32,854.00
100.0%
407,675.30
100.0%
66,620.81
27.8%
67,316.63
49.9%
12,627.71
38.4%
146,565.15
36.0%
Contribution Margin
173,365.19
72.2%
67,518.67
50.1%
20,226.29
61.6%
261,110.15
64.0%
Less Fixed Expenses
110,028.47
Less Variable Expenses
52,900.58
17,453.56
180,382.61
Net Operating Income
80,727.54
Computation of Break-even Point:

Fixed Cost / Overall Contribution Margin
180,382.61 / 0.64 = 281,847.83
Different: 286,303.30 281,847.83 = 4,455.47 under than calculation
Page:
29
18.
CONCLUTION:
18.1 Hotel Operation is unique

The hotel operation is unique not like normal manufactures, there is many departmental profit that can be
computed the break-even point. Those departmental profits has different characteristic of operations.
18.2 Computation Break-even Point of Hotel

Because every departmental profit is different in operations also the expenses structures are different, so
to calculate the break-even point is better use this example.
18.3 Common Formula used
Common Break-even formula still used to calculate departmental profits, but overall hotel operation will
have big different.
Page:
30
GLOSSARY OF TERMS
Break-even point
the break-even point is the point at which the supplier of a service

or goods has covered all fixed and variable costs, to that point.
After that point, the supplier can begin to make a profit, because
the contribution is now to profit and not to fixed costs. For more
detail see the toolkit on developing a financing strategy.
Contribution Margin
A cost accounting concept that allows a company to determine the

profitability of individual products.
It is calculated as follows:
Product Revenue - Product Variable Costs
Product Revenue
The phrase "contribution margin" can also refer to a per unit
measure of a product's gross operating margin, calculated simply
as the product's price minus its total variable costs..
Payroll
dependent upon usage, can mean a. the total amount of money

paid in wages; b. a list of employees and their salaries; or, c. the
department that determines the amounts of wage or salary due to
each employee.
Consolidated Budget
is the budget that accounts for all operating accounts of a parent

and all subsidiaries presented.
Fixed Cost
is operating expenses that are incurred to provide facilities and

organization that are kept in readiness to do business without
regard to actual volumes of production and sales. Fixed costs
remain relatively constant until changed by managerial decision.
Within general limits they do not vary with business volume.
Examples of fixed costs consist of rent, property taxes, and
interest expense.
Variable Cost
are those costs associated with production that changes directly

with the amount of production, e.g., the direct material or labour
required to complete the build or manufacturing of a product.
End of Best Practice of Hotel Room Division Departmental Profit

See you for Best Practice of Hotel F & B Division Departmental Profit
Page:
31

Break Even Point Computation For Hotel

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Hotel Room Division

Developed by: Drs. Agustinus Agus Purwanto, MM

BEP = break-even point (units of

1. Break-even point (in units) =

unit contribution margin

Classic Spread Sheet from Consolidated

Still many other formulas like as

Developed by: Drs. Agustinus Agus Purwanto, MM

2.1 Room Divison Departmental Profit

2.2 Food and Beverage Division Departmental Profit

Developed by: Drs. Agustinus Agus Purwanto, MM

3. Classic Spread Sheet Break-even Point Analysis for Room Division

Developed by: Drs. Agustinus Agus Purwanto, MM

Sales & Marketing

Total Fixed Costs

Developed by: Drs. Agustinus Agus Purwanto, MM

Flower & Decorations

Guest Supplies - F & B

Guest Supplies - Amenities

Printing & Stationery

Cleaning Supplies & Tools

Administration & General

Sales & Marketing

Total Variable Costs

Income from Operations

Telephone & Fax

Developed by: Drs. Agustinus Agus Purwanto, MM

Average Room Rate

Breakeven Room Night

Developed by: Drs. Agustinus Agus Purwanto, MM

We do test for January 2009 for Room Division as follow:

We do test for Total 2009 for Room Division as follow:

Developed by: Drs. Agustinus Agus Purwanto, MM

Sales = Variable Cost + Fixed Cost + Profit

Developed by: Drs. Agustinus Agus Purwanto, MM

Developed by: Drs. Agustinus Agus Purwanto, MM

Hotel F & B Division

Developed by: Drs. Agustinus Agus Purwanto, MM

1.2. Food and Beverage Cost of Sales

1.3. Provision of Food and Beverage

1.4. Other Expenses

Developed by: Drs. Agustinus Agus Purwanto, MM

Developed by: Drs. Agustinus Agus Purwanto, MM

Administration & General

Sales & Marketing

Total Fixed Costs

Printing & Stationery

Developed by: Drs. Agustinus Agus Purwanto, MM

Telephone & Fax

Sales & Marketing

Total Variable Costs

Income from Operations

Administration & General

Developed by: Drs. Agustinus Agus Purwanto, MM

Income from Operations Analysis

Income from Operations Analysis

Developed by: Drs. Agustinus Agus Purwanto, MM

We do test for January 2009 Food and Beverage Division as follow:

We do test for Total 2009 as follow:

Developed by: Drs. Agustinus Agus Purwanto, MM

Sales = Variable Cost + Fixed Cost + Profit

To prove January 2009 Result of Classic Spread Sheet Break-even Point: