How does the process of allocating revenues and expenses between hotel departments impact the ability of a food & beverage department to show a profit?
How does the process of allocating revenues and expenses between hotel departments impact the ability of a food & beverage department to show a profit?
In an organization, the revenues and expenses earned and incurred by the organization are distributed or allocated among the departments, in such how that the prices are proportionally distributed. the rationale for proportionality is to allocate the expenses supported by maximum utilization. If the performance of the department is extremely good, the revenues allocated to the department are more from the entire revenues, within the same way, the expenses are allocated as per the proportion of the entire expenses incurred by the corporate. If the department has incurred more expenses then they're going to be allocated with those expenses.
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