What is the main purpose of a cost center in a hotel?a) To generate revenue in line with the hotel goalsb) To reduce costsc) To forecast and plan for budgetingd) To support revenue producing departments

Answered: What is the main purpose of a cost…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

What is the main purpose of a cost center in a hotel?
a) To generate revenue in line with the hotel goals
b) To reduce costs
c) To forecast and plan for budgeting
d) To support revenue producing departments

Expert Solution

Step 1: Introduce to cost centers

Cost centers in hotels are divisions or tasks that assist revenue-producing divisions but do not produce income themselves. They do not directly get payment from customers, but they are necessary to the hotel's efficient running.

Examples of cost centers in a hotel include:

Housekeeping
Maintenance

Cost centres are crucial because they enable the smooth and successful operation of departments that generate income. For instance, the housekeeping division makes sure that guest rooms are tidy and prepared, the maintenance division makes sure that the hotel's amenities are in excellent shape, and the IT division makes sure that the hotel's technological systems are operational.