Analysis of Departmental Profitability
DOI link for Analysis of Departmental Profitability
Analysis of Departmental Profitability book
Allocation and apportionment of expenditure The preparation of a departmental profit and loss account necessitates an analysis of expenditure between the revenue-producing departments or profit centres of the hotel. In the case of some of the expenses, we have no problem in deciding where such expenses clearly and naturally belong. We know that payroll in the rooms department should be a charge against room sales, the cost of beverages consumed is obviously a charge against beverage sales, and repairs to kitchen equipment are clearly and indisputably a charge against food sales. In all these cases it is quite apparent where the expense has arisen, and we simply charge it against the revenue of the department which has had the sole and exclusive benefit of such expenditure. All expenses in this category are said to be allocated.