HTM 2030 Chapter Notes - Chapter 3: Contribution Margin, Fixed Cost, Income Statement

• School: University of Guelph
• Department: Hospitality and Tourism Management
• Course: HTM 2030
• Professor: William Murray

Document Summary

January 22, 2018 class 5 chapter 3 - Context is critical when judging: the relatio(cid:374)ship (cid:271)et(cid:449)ee(cid:374) (cid:272)ost, (cid:271)usi(cid:374)ess (cid:448)olu(cid:373)e a(cid:374)d (cid:449)hether profit is either (cid:858)good(cid:859) or (cid:858)(cid:271)ad(cid:859) Can be contingent on: the overall market, your clientele (target market, the competition the willingness and ability of customers to pay more, the impact of lowering costs of the quality of good, beverages and service. Increased costs (value)/menu prices the same: cost stay the same/ menu prices down. Impact on volume: growth in volume offset costs changes, potential increase in demand. Lower cost: decreased costs (value)/ menu prices the same, costs stay the same/ menu prices increase. Impact on volume: drop in volume greater than costs changes, potential decrease in demand, decrease value proposition. Determining total sales ($) when: cost of sales, costs of labor, cost of overhead, and desired profit. Operation statement categories: cost of sales = variable, cost of labor = semi-variable, cost of overhead = fixed.