Whether a hospitality and tourism establishment provides services or a combination of both to its customers, guests or clients, there are many expenses or costs incurred. Costs or expenses directly impact profit as they are deducted from revenue earned and when cash is paid, effect cash flow. One of the main responsibilities for managers of departments, general managers and owners is to balance effective and efficient operations whilst minimising costs. Costs can be classified a number of ways, depending on the information management want about operations or other aspects of the business. The larger the hospitality and tourism establishment, the greater the variety will be in cost classifications used as responsibility is divided by departments or functional areas. The most common classifications are: Controllable and Non-controllable costs Controllable costs are those costs that managers of department, functional area or establishment manage and control. For example, the manager of the food and beverage department is controls the total cost of food and beverage supplies. controllable costs are those that a manager cannot control in the short term. When evaluating the performance of their department, managers will focus on their analysis and decision-making on costs. Direct and indirect costs Direct costs are those costs that can be directly traceable to a department or area of the business. The wages for a chef producing food is a direct cost for a food and beverage outlet and housekeeping is a direct cost for the rooms department of an accommodation venue. Indirect costs cannot easily be assigned to any one department or functional area. Sometimes these costs are called overheads, expenses or undistributed expenses in hospitality and tourism establishments. Typical examples are rent, depreciation, and administrative and general expenses.
Whether a hospitality and tourism establishment provides services or a combination of both to its customers, guests or clients, there are many expenses or costs incurred. Costs or expenses directly impact profit as they are deducted from revenue earned and when cash is paid, effect cash flow. One of the main responsibilities for managers of departments, general managers and owners is to balance effective and efficient operations whilst minimising costs. Costs can be classified a number of ways, depending on the information management want about operations or other aspects of the business. The larger the hospitality and tourism establishment, the greater the variety will be in cost classifications used as responsibility is divided by departments or functional areas. The most common classifications are: Controllable and Non-controllable costs Controllable costs are those costs that managers of department, functional area or establishment manage and control. For example, the manager of the food and beverage department is controls the total cost of food and beverage supplies. costs are those that a manager cannot control in the short term. When evaluating the performance of their department, managers will focus on their analysis and decision-making on costs. Direct and indirect costs Direct costs are those costs that can be directly traceable to a department or area of the business. The wages for a chef producing food is a direct cost for a food and beverage outlet and housekeeping is a direct cost for the rooms department of an accommodation venue. Indirect costs cannot easily be assigned to any one department or functional area. Sometimes these costs are called overheads, expenses or undistributed expenses in hospitality and tourism establishments. Typical examples are rent, depreciation, and administrative and general expenses. controllable