Vertical Analysis Assessment
Length: 1,200 words (approximately 1,000 words excluding the vertical analysis)
Weighting: 30%
Due: Sunday 27th August 2017 (10 pm)
Assignment Overview
The Jade Hotel is a medium sized hotel located in the Sydney CBD. It is part of the successful Jade Hotel Group that was established some ten years ago. The hotel group is Australian based, it does not have operations outside of Australia. The Jade Hotel, Sydney is the newest addition to the group and has been operating for just six months. Without any historical trading results to compare current performance to, it is appropriate to conduct a vertical analysis of the Profit & Loss Statement in order to evaluate performance and control day-to-day operations.
You are required to undertake a comparative vertical analysis of the operational results for the Food and Beverage Department. For this purpose, you are provided with the performance benchmarks used across the hotel group. Based on this analysis, identify areas of significant overspend and suggest possible causes.
Assignment Instructions
From the information provided for the Food and Beverage Department you are to:
1. Convert the Profit & Loss Statement to a comparative vertical analysis format.
2. Identify and explain areas of significant overspend in relation to expenses and suggest possible causes. Address the three most significant areas of overspend only.
3. Select one of the areas of significant overspend identified in part 2. What data/information/records/source documents (in addition to the Profit & Loss Statement and vertical analysis) could you review, to fully investigate the actual cause of the overspend?
Written Report Requirements
The assignment should be clearly divided into the three parts detailed above.
The assignment is to be written in Word and submitted online via the submission link on LCB Engage. A minimum of 75% of your submission must be original (apart from the Profit & Loss Statement and benchmarks provided). All non-original material must be referenced.
Please note: Do not include an introduction or a conclusion. Use Excel for the comparative vertical analysis and then copy into Word. Be sure to display all percentages in the comparative vertical analysis to one decimal place. Pay attention to the presentation of the comparative vertical analysis.
The Jade Hotel Departmental Profit & Loss Statement Food and Beverage Department
For the Period January to June 2017
Sales Revenue $
Restaurant 335,600
Coffee Shop 202,700
Banquets 241,100
Room Service 65,600
Bar 151,800
Total Sales Revenue 996,800
Cost of Goods Sold
COGS – Food & Beverage 296,600
Gross Profit 700,200
Departmental Expenses
Salaries & Wages 324,678
China, Glassware 5,700
Cleaning Supplies 6,800
Decorations 2,300
Electricity 59,400
Laundry 16,400
Licenses 6,600
Linen 5,225
Menus 1,800
Miscellaneous 23,875
Paper Supplies 5,900
Repairs & Maintenance 45,850
Stationery 3,900
Uniforms 12,600
Utensils 1,800
Total Departmental Expenses 522,828
Departmental Profit (Income) 177,372
The Jade Hotel Group Performance Benchmarks Food and Beverage Department
For the Year 2017
Sales Revenue %
Restaurant 34.5%
Coffee Shop 20.0%
Banquets 23.5%
Room Service 7.0%
Bar 15.0%
Total Sales Revenue 100.0%
Cost of Goods Sold
COGS – Food & Beverage 29.0%
Gross Profit 71.0%
Departmental Expenses
Salaries & Wages 30.0%
China, Glassware 0.6%
Cleaning Supplies 0.7%
Decorations 0.5%
Electricity 5.0%
Laundry 1.8%
Licenses 0.7%
Linen 0.5%
Menus 0.3%
Miscellaneous 2.5%
Paper Supplies 0.7%
Repairs & Maintenance 4.0%
Stationery 0.4%
Uniforms 1.4%
Utensils 0.2%
Total Departmental Expenses 49.3%
Departmental Profit (Income) 21.7%
Marking Guide
Criteria % Excellent Very Good Good Adequate Needs some more work Needs much more work Unacceptable
Comparative vertical analysis statement including presentation 20
Interpretation of results: identification &
explanation of overspend & causes 40
Data sources: explanation of additional data appropriate to
investigation of overspend 10
Terminology:
appropriate/correct use of accounting terminology 10
Presentation: overall readability, including grammar, spelling & punctuation, clarity of expression & proper referencing 20
Total 100 Overall Grad e =
4