SITXFIN004Prepare and MonitorBudgetsLEARNERGUIDELearner Guide2SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning MaterialsCopyrightThis document was developed by Careers Australia Learning, and is adapted, used, and distributed byRTO Learning Materials.© 2018 Careers Australia.All rights reserved.No part of this publication may be reproduced, stored in a retrieval system or transmitted in any formor by any means, electronic, mechanical, photocopying, recording or otherwise without the prior writtenpermission of RTO Learning Materials.Version Control & Document History DateSummary of modificationsVersion13 January 2019Version 1.0 released for publishing1.0 Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials3Table of ContentsAbout this Unit of Competency……………………………………………………………………………… 4This Learner Guide Covers …………………………………………………………………………………… 4About the Tourism, Travel and Hospitality Training Package Industry …………………….. 5Defining Qualifications …………………………………………………………………………………………. 6Delivery and Assessment of Qualifications ……………………………………………………………. 6Qualification Training Pathways……………………………………………………………………………. 6Foundation Skills …………………………………………………………………………………………………. 6Australian Core Skills Framework (ACSF) ……………………………………………………………… 6Introduction…………………………………………………………………………………………………………. 7Chapter 1: Prepare Budget Information …………………………………………………………………. 81.1 Determine and Confirm Scope and Nature of Required Budgets …………………….. 81.2 Identify, Access, and Interpret Data and Data Sources Required for BudgetPreparation………………………………………………………………………………………………………. 91.3 Analyse Internal and External Factors for Potential Impact on Budget ………….. 121.4 Provide Opportunities for Colleagues to Contribute to Budget Planning Process………………………………………………………………………………………………………………………. 13Chapter 2 Prepare Budget…………………………………………………………………………………… 142.1 Draft Budget Based on Analysis of All Available Information ……………………….. 142.2 Estimate Income and Expenditure and Support with Valid, Reliable and RelevantInformation …………………………………………………………………………………………………….. 162.3 Reflect Organisational Objectives within Draft Budget…………………………………. 172.4 Assess and Present Options and Recommendations in a Clear Format ………… 182.5 Circulate Draft Budget to Colleagues and Managers for Input ………………………. 20Chapter 3 Finalise budget …………………………………………………………………………………… 213.1 Negotiate Budget According to Organisational Policy and Procedures …………. 213.2 Agree on and Incorporate Modifications ……………………………………………………… 213.3 Complete Final Budget in a Clear Format within Designated Timelines …………. 223.4 Inform Colleagues of Final Budget Decisions and Application within RelevantWork Area, Including Reporting and Financial Management Responsibilities……… 23Chapter 4 Monitor and Review Budget…………………………………………………………………. 244.1 Regularly Review Budget to Assess Actual Performance against EstimatedPerformance and Prepare Accurate Financial Reports………………………………………. 24Learner Guide4SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials4.2 Incorporate All Financial Commitments into Budget and Budget Reports……… 264.3 Investigate and Take Appropriate Action on Significant Deviations………………. 274.4 Analyse Changes in Internal and External Environment and Make NecessaryAdjustments …………………………………………………………………………………………………… 314.5 Collect and Record Relevant Information to Assist in Future Budget Preparation………………………………………………………………………………………………………………………. 31Conclusion ………………………………………………………………………………………………………… 34References ………………………………………………………………………………………………………… 35About this Unit of CompetencySITXFIN004 Prepare and Monitor BudgetsThis unit describes the performance outcomes, skills and knowledge required toanalyse financial and other business information to prepare and monitor budgets. Itrequires the ability to draft and negotiate budgets, identify deviations, and manage thedelivery of successful budgetary performance.The unit applies to all tourism, travel, hospitality and event sectors. The budget maybe for an entire organisation, for a department or for a particular project or activity.It applies to senior personnel who operate independently or with limited guidance fromothers and who are responsible for making a range of financial managementdecisions.No occupational licensing, certification or specific legislative requirements apply to thisunit at the time of publication.Click here for more detailsThis Learner Guide CoversSITXFIN004 Prepare and Monitor Budgets1. Prepare budget information2. Prepare budget3. Finalise budget4. Monitor and review budgetLearner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials5About the Tourism, Travel and Hospitality TrainingPackage IndustryThe SIT Training Package covers a diverse range of industries and occupations. Itcovers a range of cross-industry functions and services supporting Tourism, Traveland Hospitality.Learner Guide6SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning MaterialsDefining QualificationsWhen units of competency are grouped into combinations that meet workplace roles,they are called qualifications. These qualifications are aligned to the AustralianQualifications Framework (AQF). Each qualification will have ’packaging rules’ whichestablish the number of core units, number and source of elective units and overallrequirements for delivering the qualification.Delivery and Assessment of QualificationsRTOs must have the qualifications (or specific units of competency) on their scope todeliver nationally recognised training and assessment. RTOs are governed by andmust comply with the requirements established by applicable national frameworks andstandards. RTOs must ensure that training and assessment complies with the relevantstandards.Qualification Training PathwaysA pathway is the route or course of action taken to get to a destination. A trainingpathway is the learning required to attain the competencies to achieve career goals.Everyone has different needs and goals, and therefore requires a personalised andindividual training pathway.Foundation SkillsFoundation Skills are the non-technical skills that support the individual’s participationin the workplace, in the community and in education and training.Australian Core Skills Framework (ACSF)This Assessment meets the five ACSF core skills as described in the Foundation Skillsmapping.Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials7IntroductionIf you have completed SITXFIN004 Prepare and Monitor Budgets, you learned aboutdifferent types of budgets and how to manage them. This unit takes this process astep further by teaching you how to analyse financial information, then create andmonitor budgets. You will learn the process of drafting and finalising a budget throughexamining the influence of internal and external factors, negotiating with relevantpersonnel, and reflecting organisational policies and procedures.Budgets are a forecast or a projection of future earnings and expenditure over a periodof time and can also be referred to as a financial plan, forecast, or target. Having arobust understanding of an organisation’s goals will assist in creating an attainablebudget whether for a project, department or the business as a whole.Learner Guide8SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning MaterialsChapter 1: Prepare Budget InformationBefore a budget can be developed and implemented there must be an understandingof exactly what it will detail and the period of time it will cover. Budgets should alwaysalign with operational goals and discussions should be held with the appropriatepeople before implementation.1.1 Determine and Confirm Scope and Nature of Required Budgets HintThis content may help you with Task 1.1 of your project. The first stage of developing any budget is to determine the scope and nature of it.The scope is the range of the area or subject matter that something deals with or towhich it is relevant. The nature of a budget is its features, character, and qualities.Different budgets will have different scopes, for example, it may be to increaserevenue through sales and revenue generation, it could be a budget to decreaseexpenses and outgoings, or it may be to expand the products or services beingoffered.When defining the scope of the budget consider the following: Objectives Goals Resources ScheduleLearner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials9Be sure once the scope and nature have been established it is included or is succinctwith the organisation’s budget as a whole. For example, if one of the goals is toincrease revenue in the events department through increased marketing activities,then the sales department and marketing department budgets must reflect this. Thebenefit of defining the requirements of a budget is each manager then looks at theaspects they need to control and to take responsibility for it.Essentially, a budget is a forecast of income and expenditure (and profitability as aresult of this), a tool used for decision making, and a method to monitor theperformance of an organisation. Having a well-defined budget assists in ensuringresources are available to support the growth and development of the business.So why is it important for an organisation to have budgets along with understandingthe scope and nature of them? Facts: Budgets generally represent a thorough analysis that carefully outlinesthe expectations for each department. Limit expenditure: A detailed budget has the ability to limit how much money isto be spent on certain areas of operation. Creates financial roadmaps: A budget can be used to guide an organisationand to assist with future growth and expansion. Plan for future growth: Budgeting for future growth opportunities ensures theorganisation have capital on hand when required and can also be used duringslow economic periods.1.2 Identify, Access, and Interpret Data and Data Sources Required for BudgetPreparation HintThis content may help you with Task 1.2 of your project. There is a whole host of information, different types of data, and data sources thatshould be referenced when gathering material to prepare a budget. This may includeinterpreting research, looking at previous organisational results or understanding newlegislation that has been introduced – they can all impact the preparation of a budget.A data source can be a database, a dataset (a collection of related items of relateddata that may be accessed individually or in combination or managed as a wholeentity) or a spreadsheet. Data may be primary or secondary, with primary data beingcollected by the researcher themselves, and secondary data being data that alreadyexists.Learner Guide10SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning MaterialsPrimary data sources may include: Interviews Observations Action research Case studies Focus groups QuestionnairesSecondary data sources may include: Previous research Statistics Censuses Governmental reports Historical data and informationThe analysis of data may assist in identifying relationships and differences betweenvariables and forecast possible outcomes. This information can then be used in manytypes of organisational budgets.Budgets in organisations may include the following. Cash and cash flow budgets: A projection of all incoming and outgoing cashtransactions expected to occur during a certain time period. A business mayhave a lot of equity but without cash flow can easily lead to failure. Departmental budgets: The organisation’s overall budget is broken down intomore manageable chunks for each department to manage. Departmentbudgets also show which departments are performing well and those that arenot. Departmental targets can be created using these budgets along withcontrolling costs. Event budgets: Every event will have its own budget, for example, a conferencewill need to allocate funds to venue hire, catering, guest speakers, theming,etc., and at the same time manage registrations to ensure the event isprofitable. Project budgets: A budget designed for specific projects such as the Christmasmarketing campaign and includes the total sum of money allocated to thatproject for a specific period of time.Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials11 Purchasing budgets: This is the inventory or supplies an organisation requiresto purchase during a budgetary period. This may be the stock to meet customerorders or equipment for the operation of the business. They are usuallydeveloped once the sales budget has been finalised. Sales budgets: The sales budget is an accurate prediction of future sales so anorganisation can make informed decisions, and protect it from failing. It shouldideally be developed before other budgets and in conjunction with the masteror organisational budget. This way an organisation can see the funds it has toallocate to expenses. Past records and sales activities can assist whendeveloping sales budgets along with researching competitors andunderstanding the economy. Travel, tourism, hospitality, and events can bemajorly impacted when there is a downturn in the economy as they are oftenseen as luxury items and are often this first thing to be scrapped when beltsneed to be tightened. Wages budgets: Depending on the size of the organisation the wage budgetmay be incorporated into the cash flow budget or as part of rostering.Departments will usually manage their own wages and report them to seniormanagement. This can be on a daily, weekly, and/or monthly basis. It helpsidentify when too many staff are rostered on – this can be particularly relevantin the hospitality and event industries as the busy periods generally come inpeaks and troughs, such as service times. Consideration should also be madein these industries for penalties such as weekend rates and working pastmidnight.An organisation will often/ have a blend of casual, part-time, and full-timeemployees to suit the needs of the business. Whilst an organisation doesn’tneed to pay annual or personal leave days to a casual employee their rate ofpay is higher. Also, casual employees may not have the skills, knowledge, orcommitment of part or full-time employees.Pay cycles should also be thought through when developing a wage budget –will employees be paid weekly, fortnightly, or monthly? There are many awardsapplicable to hospitality and events and an organisation has an obligation tomeet these requirements as a minimum if they are offering a position thatdoesn’t refer to the award. Whole of organisation budgets: Often referred to as the master budget thisbudget sets the goals, targets, and expenditure for the whole organisation.Once again, previous years’ records can be used as guidance along withmaking an allowance for variables such as economic climate, the age of thebusiness (is a refresh or refurbishment required?), changes in peak and lowseasons, or a change or development in the organisation. This may be a newoutlet such as a bar being added, or the company being bought by new owners.Inflation must also be investigated as it will impact wage costs but also the priceLearner Guide12SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materialsof goods and services offered. Some other increase in costs may be utilitiessuch as electricity and gas, insurance, rates, and of course, taxes.1.3 Analyse Internal and External Factors for Potential Impact on Budget HintThis content may help you with Task 1.3 of your project. To determine the impact internal and external factors will have on a budget, they needto be analysed. Internal factors are those determined within the organisation itself.This may include the organisational culture, the style of management, along with thecurrent employees. Internal factors are basically the strengths and weaknesses of thebusiness and can have a strong impact on how well an organisation meets itsobjectives. If the internal factors are seen as a strength, then they will have afavourable impact, conversely, the factors seen as a weakness will have a negativeconsequence. (Business Dictionary, n.d.)External factors are the influences outside of an organisation and often have littlecontrol over.Some of the internal and external factors that impact on budget development include: Growth or decline in economic conditions: Some examples include the globalfinancial crisis (GFC), inflation, change in interest and exchange rates. Human resource requirements: The employees who need to be recruited,inducted, and trained in all positions for the organisation for it to achieve itsgoals. New legislation or regulation: Such as lock out laws impacting trading hours,work health and safety requirements, changes in superannuation, changes inpenalty rates. Organisational and management restructures: To make organisations moreprofitable and integrated and may include redundancies, mergers, or astreamlined reporting structure. Organisational objectives: The goals an organisation seeks to accomplish. Scope of the project: The impact any projects will have on an overall budget.These projects should have their own budget to assist with controlling costs. Shift in market trends: An increase or decline in consumers’ desire to purchasegoods or services, a shift in the supply and demand.Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials13 Significant price movement for certain commodities or items: This may due toseasonal changes, for example, hotels that have a peak and low season andoffer rates accordingly or it may be a result of a fad or trend. Supplier availability and cost: Demand outweighs availability and forces pricesup, such as when bananas became very expensive due to Cyclone Yasi.Alternatively, when there is a glut in the market, then suppliers will generallyoffer goods at a reduced cost to move excess stock.Whether a factor impacting the budget is internal or external, they should be whengathering information to prepare it as keeping them in mind them will eventuate in amore accurate budget. Another method to assist with creating a reliable budget is toseek input from colleague.1.4 Provide Opportunities for Colleagues to Contribute to Budget PlanningProcess HintThis content may help you with Task 1.4 and 1.5 of your project. Colleagues, particularly those working on the frontline, can provide an insight intoprocedures that have and haven’t worked. They can let you know if they areunderstaffed, or there are staff members standing around doing very little, or itemsthat sell well and those that don’t. They can also let you know if new equipment isrequired or old or faulty equipment needs to be replaced.There are several methods that can be used to consult with colleagues including: Team meetings Department meetings Using presentations and allowing for an open discussion Keeping it simple and encouraging feedback.Providing colleagues with an opportunity to express their opinions will give them asense of inclusion and ownership of their budget. They feel valued and are more likelyto perform better, which in turn, will assist in achieving the budget.It is also valuable to consult with senior staff as they may have further insight into theoverall direction of the organisation and this could have an impact on the budget. Forexample, a hotel may decide it wants to extend its operating hours for reception. Theymay also have relevant information from owners or key stakeholders that need to beconsidered or included.Learner Guide14SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning MaterialsChapter 2 Prepare BudgetOnce the information required to create an accurate budget has been gathered thenthe preparation of the budget itself can begin. Any budget must follow organisationaland accounting guidelines. Initially, a draft budget will be created and circulated torelevant colleagues to provide input. Once this is completed, the budget can befinalised. So what do we need to know to prepare the draft budget? We have lookedat the importance of factoring in internal and external factors, along with seekinginvolvement from colleagues, however, there is other information that should beanalysed.2.1 Draft Budget Based on Analysis of All Available Information HintThis content may help you with Task 2.1 of your project. When beginning a draft budget the following should be considered: Projected expenses Projected income The interaction or relationship between income and expenses Adjustments to reflect real time as the year progresses.ProjectedexpensesProjectedincomeRelationshipbetweenincome andexpensesAdjustmentsto reflectreal time asthe yearprogresses.Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials15To assist with defining the above points there are other sources required for budgetpreparation. These may include: Competitor research: Look at what your competitors offering. Are theyintroducing new products or services? What makes them stand out? Do theirprices match yours? Is their product high or low quality? You can find out moreinformation on your competitors by completing, for example, a SWOT analysis.This looks at the strengths, weaknesses, opportunities, and threats of yourorganisation as well as those of your competitors. Once completed you cananalyse the information to see where your organisation sits within the market. Customer or supplier research: What are your customers’ needs and wants andare you meeting them? Are they shopping or booking online, over the phone,or in person? Are your suppliers providing the best quality goods and servicesat a competitive price? Have they become complacent if they are a longstanding supplier? It is always worthwhile to keep well-informed of othersuppliers your organisation could potentially form a working relationship with –they may be able to assist with the profitability of your business. Declared commitments in areas of operation: An organisation may be planningto undergo refurbishment. This will impact the budget as more than likelyrevenue will decrease during this period. However, once it is completed thebudget should increase as you would hope the refurbishment would attractcustomers. Financial information from suppliers: How often do they increase their prices?What is their pay cycle? Are there surcharges? Financial proposals from key stakeholders: Stakeholders may want to change,upgrade, add, or eliminate certain aspects of an organisation and these needto be factored into the budget. Income and expenditure for previous time periods: A sound method to assistwith the development of the new budget, particularly if circumstances havechanged very little. Using these figures along with other budgetary influenceswill assist in accurate forecasting. Departmental, event or project budgets: There may be a special event occurringin the fiscal year that doesn’t necessarily happen each year, or there may beprojects undertaken outside of the normal day to day operations. Grant funding guidelines or limitations: Is your organisation entitled to anygrants or funding? What can the money be spent on? How will it be distributedthroughout the organisation?Learner Guide16SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials Management policies and procedures: A procedural change may require achange in the preparation of the budget. Are more or less staff required tocomplete a task than previously? Have stringent procedures been put in placethat requires more hours to complete? Has the quality of goods being soldchanged that could result in increased or decreased profits? Organisational budget preparation guidelines: Is your budget being prepared toorganisational standards? Are there templates or programs that need to beused? What does or doesn’t need to be included? Performance information from previous periods: Are there significant variancesfrom specific periods that need to be addressed in the new budget to ensure itsaccuracy? What are the profit margins? Is there a period when the organisationlost money and if so, how will that be incorporated into the planning of the newbudget.All this information should be used in drafting a budget. In doing so, potential revenueand expenses can be forecast accurately and reliably, creating an achievableorganisational budget.2.2 Estimate Income and Expenditure and Support with Valid, Reliable andRelevant Information HintThis content may help you with Task 2.1 of your project. When estimating income and expenditure organisational policies and procedures andgoals need to be factored in. For example, if the owners have determined they wouldlike business to grow by 15%, then your budget needs to reflect how this is going tobe achieved. Department heads should communicate any commitments they alreadyhave or will have for the forthcoming year.Previous past financial records are a fantastic source of information especially if thereis little movement in the operations of the organisation. The other factors can then becalculated based on these records. For example, if you want to increase revenue by10% what expenses will be incurred that will impact the income? If there is a largemarketing campaign what are those costs compared to the return on investment?In the hospitality industry, revenue can be estimated by looking at the number ofcustomers an organisation hopes will use their products and services over a givenperiod of time. This could be the covers in a restaurant, the number of rooms sold ina hotel, or the delegates attending a conference. Remember, the annual desiredincome shouldn’t just be spread out evenly over the 12-month period of the life cycleof the budget. Historical data should also reflect high and low seasons and thisLearner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials17information can be used to develop the upcoming budgets. These fluctuations canguide your estimates along with the financial commitments.There are some techniques that can be used when making budget estimates,particularly in regards to costs. SMART goals: Be sure when estimating forecasts are specific, measurable,achievable, realistic, and time-bound. This way, it is easy to see what isexpected and when. Analogous estimating: This form of estimating is used when there is little detailat hand. This may be for a project or for example, an opening for a new outlet.For this technique, the costs and income are estimated by comparing it tosimilar projects. This technique is also known as top-down estimating. It isgenerally not particularly accurate. Parametric estimating: Uses historical data to calculate costs and revenue,along with statistical data. This is a better way to estimate compared toanalogous estimating. Three-point estimating: This technique is used to reduce uncertainties inestimating assumptions. Rather than one estimate, three estimates aredetermined and then their average is taken to reduce the uncertainties, risks,and biases. Bottom-up estimating: Is the most accurate, time-consuming, and costlytechnique in estimating. In this technique, the cost of each single activity isdetermined with the greatest level of detail at the bottom level and then rolls upto calculate the total cost.2.3 Reflect Organisational Objectives within Draft Budget HintThis content may help you with Task 2.1 of your project. An organisation’s goals and objectives must always be reflected in the draft and finalversion of the budget. The organisation may wish to expand their business ormarketing campaigns, update or purchase new fittings, fixtures or equipment, ordecrease expenses. Whatever the objectives they need to be replicated within thedraft budget. For example, a hotel may decide to run a marketing campaign for theEaster school holiday as they feel they are missing out on an opportunity. The cost ofthe campaign would need to be reflected in the budget, along with a forecast for theincome the campaign aims to generate.Learner Guide18SITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials2.4 Assess and Present Options and Recommendations in a Clear Format HintThis content may help you with Task 2.1, 3.2 and 4.2 of yourproject. Budgets must be presented in a clear format for employees and others to be able toread and understand. There is a lot of jargon and financial terms used in budgetingand these must be communicated in a way all employees and stakeholders can easilyunderstand.Commonly, Excel spreadsheets are used in an organisation to manage budgets. Excelis a particularly useful program as you can create formulas to work out complexcalculations. This means there is less of a chance that human areas are made and itis also a great time – saving tool.Let’s look at a very simple budget for the accommodation occupancy for a hotel. Mosthotels will have several room types and the rates they are offered at will varydepending on demand. Rates will increase over the busy period, such as Christmas,but will be lower during quiet periods. This is to try to tempt people to stay and at theend of the day, the hotel would rather have ‘heads on beds’ than have empty rooms. 12345678SeptemberForecast Rateperroom$AUDNumberofRoomsperNight TotalNumberof RoomNightsAvailableperMonthBudgetForecastItem DescriptionOccupiedNumberof RoomNightsTOTAL$AUDOccupiedNumber ofRoomsTOTAL$AUDRevenueAccommodation Standard Room200752,2502,025405,0002138427,500Mountain View250651,9501,755438,7501853463,125Ocean View300501,5001,350405,0001425427,500Executive Suite50010300270135,000285142,500Room SalesTotal 2006,0005,400$1,383,7505,700$1,460,625 Learner GuideSITXFIN004 Prepare and Monitor BudgetsVersion 1.0 Produced 13 January 2019© RTO Learning Materials19The above figures have been calculated to show the budget and forecast for the monthof September. This budget would have been developed several months ago based onpast records, the knowledge of those working at the hotel, and research.Each column denotes:1. The month that the budget and forecast is covering and the different types ofrooms available at the hotel. The hotel rooms generate income and aretherefore included in the revenue section of a budget.2. This is the room rate that will be offered for each room type. A hotel revenuemanager would look at these rates daily adjust them accordingly, but for thisexample, the rate has been left the same throughout the month.3. Column 3 is the number of room nights available each night with the hotelhaving a total of 200 rooms available to sell.4. The number of room nights have been multiplied by the number of days in themonth (30 in this case), to get the total number or rooms that will be availablethroughout the month of September.5. This is the total number of room nights that has been budgeted. In this example,the budget has been set at 90% occupancy rate across all room types. The totalnumber of room nights available for the month has been multiplied by 90% foreach room type.6. The budgeted number of room nights has multiplied by the room rate. 2,025 x$200 = $405,000. This process has been continued for the remaining roomtypes and the total calculated. The total budget for September is $1,383,750.7. For this example, the forecast is looking favourable and has been calculated at95%. This means that the budget will be surpassed and this is reflected in thenumber of room nights sold; 5,400 budgeted versus a forecast of 5,700.8. The final column is calculated once again, by multiplying the number of roomsfrom column 7 by the room rate.The forecast would need to be updated should, for example, some rooms were notavailable throughout the month. This may be due to maintenance or refurbishment. Ifthis was the case, then the number of rooms per night would be adjusted and the totalsrecalculated.The forecast budget will then be updated in the lead up and most likely during themonth of September. At the end of the month the actual figures will be reported onalong with identifying any significant variances and the reasons for them.When assessing and presenting rec
