YTL – International College of Hotel Management

Programme

Diploma in Event Management

Class

DEM 420

Subject & Assignment Title

BMM 4033: Financial and Cost Accounting

Assessment 1 (Individual): Application of costing within an operational unit of an

international hotel

Student Name and ID Number

Teng Shun Long (81906)

Lecturer Name

Mr. Khoo Peng Hong

Word Count

954

Submission Date

07 September 2020

I hereby state that this material is original and a result of my own effort. Any material
copied from other sources will be given their due respect in the form of referencing and
bibliography.

Date/time received:

Lecturer’s signature: Marks Awarded

Subject: Answering all the query

Dear Area Manager,

I am Maitre D’hotel for Cranfield’s Fine Dining Restaurant. The purpose of writing this email
to you is answer all following questions and would provide with the adequate reasons.

In the first place, definition of sales return is commodity that was returned to the seller by
client. Furthermore, the sales return can be named as return inwards too. Thus,
merchandise that company sold were continuously returned by customer, caused sales
return increased and income of company decreased. One of the reasons that caused
customer continuously returned is commodity does not match description on menu or
website. This return reason is simply cannot be accept and it may also affect reputation of
the company too. Beside that, food and beverage did not meet customer’s expectations
would make customers send back the food to the restaurant too. In the other hand, the
service staff worked at the restaurant make a mistake. For the example, the customers is
ordering set A but the service staff order wrong to set B and it would cause the customer
sent back the incorrect set to the restaurant and cause the sales return are unacceptably
high.

According the cost of good sold in the year June 2018, the actual and estimated that I
calculated is RM 64600 and RM 86300, the variance between actual and estimated is too
many as RM 21700. Then, variances can occur broadly due to either factors may control and
uncontrollable factors. For the example, a poorly planned budget and labour costs are
classify as controllable factors. On the contrary, uncontrollable factors are always external
and arise from occurrences exterior the organization such as a natural disaster, earthquake,
flood, storm and others. One of the main reasons occurred the variance is there is no
method to focus on forecast and the budget for future costs and revenue. Beside that,
variances are also classify into favorable variances and unfavorable variance. The meaning
of favorable variances is producing more revenue than expected and the meaning of
unfavorable variances are the contrary, less income is produced or more price incurred. For
the huge difference variance refer to the restaurant’s losses, display on the cost of good sold
is the food and beverage opening stock estimated is RM 64800 but the actual that restaurant
only use is RM 42800 and the variance is RM 22000. Then, there are many reasons may
affect variances such as reason for material cost, reason for material usage, cause for
labour rate, cause for labour efficiency, cause for overhead efficiency and more.

In the other hand, according the operating cost for the year end June 2018, the estimated
and actual that I calculated is RM 166950 and RM 141370, the variance between actual and
estimated is many as RM 25580. After a lot of research that I do, I found there are several
actual were more than the estimated. One of the actual higher than estimated is equipment
breakage and the variance between actual and estimated is too many as RM 3300. The
possibility that caused actual of the equipment breakage is higher than estimated is
equipment is broken or caused critical damage. Beside that, actual of the equipment service
also higher than estimated and reach up to RM 100, because the price of equipment service
changed. In addition to this, wages also one of actual that higher than estimated, the actual
and estimated recorded in operating costs for the year end June 2018 is RM 46000 and RM
38000. The probability that caused actual of the wages is higher than estimated due to
rewarding employee such as reward bonus, increase staff’s salary, organize company trip
and more. Thus, actual of the utilities also higher than estimated and the variance between
actual and estimated is RM 1300. For the example, the service staff of the restaurant use
more water and electric then the cost of utilities would increase too.

Apart from this, there are many suggestions to improve profit for the restaurant. One of the
suggestions that may improve profit of the restaurant is focus on service and quality. For the
example, the company should train the people that desire work at restaurant become a
professional service staff and do not make mistakes such as miswriting the order. The
second suggestions that may improve profit of the restaurant is implement daily specials
because it may charge more to improve profit of the restaurant, than other entrees without
much resistance from guests. In this addition, the restaurant also can decrease the sales
return from the customer because of the food pattern is same every day and don’t have
provide any innovation food. The third suggestions to improve profit for the restaurant is take
a second look at the menu and make an analysis about the costs of the food whether
suitable for the masses, such as pricing a menu too low would reduce restaurant’s profit
margin. If pricing a menu too high, it can’t attract customer to restaurant take a meal and the
restaurant’s profit margin will decrease too. The last suggestions to improve profit for the
restaurant is providing promotion and happy hours. This is one of the best methods to attract
existing and new customers to the restaurant. By using this method, the profit margin of the
restaurant definite would increase. These are my suggestions can improve restaurant’s profit
margin in the next period and it may also solve the problem of the sales return too.

If you have any doubt or need the further assistance, please do not hesitate to contact me or
email me. Thank you.

Best regards,

Teng Shun Long.

Maitre D’Hotel for Cranfield’s Fine Dining Restaurant.

TP +6012 407 4413, Email Address: dem420.shunlongteng@ytl-ichm.edu.my