CONTROLLING EXPANSESBUDGETIG1/26/2012   Free template from www.brainybetty.com   1
CONTANT      •     Budgeting .                •    Stage of purchasing .      •     Budget .                   •    Types ...
• Cost control in different areas .   • MIRR .   • Different forms .1/26/2012               Free template from www.brainyb...
BUDGETING   • Budgeting in a business sense is the     planned allocation of available funds     to each department within...
• Budgeting is usually handled during     meetings with accountants, financial     experts and representatives from each  ...
BUDGET   • A budget (from old French bougette,     purse) is a financial plan and a list of     all planned expenses and r...
1/26/2012   Free template from www.brainybetty.com   7
Types of Budget   •   Sales budget .   •   Production budget .   •   Cash flow/cash budget .   •   Marketing budget .   • ...
Capital Budgeting   • The process in which a business     determines whether projects such as     building a new plant or ...
Methods Are Used In Capital   Budgeting   •   Accounting rate of return .   •   Net present value .   •   Profitability in...
Zero Base Budget   • Start each budget period afresh-not     based on historical data .   • Budgets are zero unless manage...
• Zero based budgets are designed to     prevent budgets creeping up each     year with inflation .1/26/2012             F...
ADVANTAGE OF ZBB   • Forces budget setters to examine     every item.   • Allocation of resources linked to     results an...
DISADVANTAGE OF ZBB   • It a complex time consuming process .   • Short term benefits may be     emphasized to the detrime...
PURCHASING   • Purchasing refers to a business or     organization attempting for acquiring     goods or services to accom...
PURCHASING SYSTEM   • A method used by businesses to buy     products and/or services.   • A purchasing system manages the...
• Purchasing systems are a key     component of effective inventory     management in that they monitor     existing stock...
PRINCIPLES OF   PURCHASING   •   Right quality .   •   Right quantity .   •   Right price .   •   Right time .   •   Right...
• Right quality:-   • The house keeping department is     responsible for providing best     services to the guest ,safe ,...
• Right quantity:-   • Placing a purchase order of right     quantity is very important for any     organization .   • A s...
• The following factors should be     kept in mind when ordering the     right quantity of material.   •   The cost of the...
• Right price :-   • To get the material on a right price is     very important for Housekeeping or     any department .  ...
• Right time:-   • The material should be made available     at the market at right time .   • The time also should be rig...
• Right source of supply:-   • The right source of supply play a very     important roll .   • The right source of supply ...
Stage of purchasing   • Pre – order stage .   • Post – order stage .1/26/2012            Free template from www.brainybett...
• Pre – order stage:-   •   Receipt of purchase indent .   •   Floating of enquiries .   •   Procurement of samples for ap...
Types of purchasing   • Formal buying / competitive – bid     buying .   • Wholesale buying .   • Negotiated buying .   • ...
• Contract purchasing order / system     contract .   • Stockless purchasing .   • Cash and carry method .   • Total plus ...
• Post – order stage:-   • Issue of purchase order .   • Confirmation of receipt of purchase     order .   • Follow up .  ...
Phases of budgeting   control   • Planning stage   • Forecasting   • Evaluation phase1/26/2012          Free template from...
PLANNING   • This is the process of preparing the     operating plans to achieve the     predetermined objectives .   • Th...
FORECASTING   • Forecasting is used by companies to     determine how to allocate their     budgets for an upcoming period...
EVALUATION   • Evaluation is the comparison of actual     impacts against strategic plans .   • It looks at original objec...
1/26/2012   Free template from www.brainybetty.com   34
WAGE   • A wage is a compensation, usually     financial, received by workers in     exchange for their labor .   • Compen...
• Investors utilize forecasting to     determine if events affecting a     company, such as sales expectations,     will i...
Linens   The exec. housekeeper is responsible     for the storage, issuing, use and     replacement of three main types of...
1/26/2012   Free template from www.brainybetty.com   38
1/26/2012   Free template from www.brainybetty.com   39
1/26/2012   Free template from www.brainybetty.com   40
Cost Control In Specific   Area   •   Guest room and public areas .   •   Linen rooms .   •   Stores .   •   Horticulture ...
Guest Rooms:-   • Staff must be trained to use cleaning     supplies and equipment efficiently     and economically .   • ...
1/26/2012   Free template from www.brainybetty.com   43
• Saving of electricity .   • Amenities should be placed in guest     room only after getting information .   • Public are...
Linen room   • Old white sheets may be cut up and     used in Banquet halls as table clothes.   • Old shower curtains can ...
Stores   • Effective stock taking and cost must     be ensured .   • Physical inventory of stores is very     important . ...
Horticulture   • A sprinkler should be installed for     watering the lawn instead of using     hose pipes .   • Dead plan...
1/26/2012   Free template from www.brainybetty.com   48
MIRR   • MIRR (Modified Internal Rate of     Return) .   • It is a financial measure used to     determine the attractiven...
• MIRR makes an explicit assumption     about the rate of investment .   • IRR is not made to calculate negative     cash ...
1/26/2012   Free template from www.brainybetty.com   51
1/26/2012   Free template from www.brainybetty.com   52
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Budget
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  1. 1. CONTROLLING EXPANSESBUDGETIG1/26/2012 Free template from www.brainybetty.com 1
  2. 2. CONTANT • Budgeting . • Stage of purchasing . • Budget . • Types of purchasing . • Phase of budgeting . • Types of budget . • Forecasting . • Purchasing . • Evaluation . • Purchasing system . • Wage . • Principle of • Linens . purchasing .1/26/2012 Free template from www.brainybetty.com 2
  3. 3. • Cost control in different areas . • MIRR . • Different forms .1/26/2012 Free template from www.brainybetty.com 3
  4. 4. BUDGETING • Budgeting in a business sense is the planned allocation of available funds to each department within company . • Budgeting allows executives to control overspending in less productive areas and put more company assets into areas which generate significant income or good public relation .1/26/2012 Free template from www.brainybetty.com 4
  5. 5. • Budgeting is usually handled during meetings with accountants, financial experts and representatives from each department affected by the budgeting.1/26/2012 Free template from www.brainybetty.com 5
  6. 6. BUDGET • A budget (from old French bougette, purse) is a financial plan and a list of all planned expenses and revenues . • It is a plan for saving, borrowing and spending . • A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade- offs between two or more goods . • In other terms, a budget is an organizational plan stated in monetary1/26/2012 Free template from www.brainybetty.com 6
  7. 7. 1/26/2012 Free template from www.brainybetty.com 7
  8. 8. Types of Budget • Sales budget . • Production budget . • Cash flow/cash budget . • Marketing budget . • Project budget . • Revenue budget . • Expenditure budget .1/26/2012 Free template from www.brainybetty.com 8
  9. 9. Capital Budgeting • The process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing . • Oftentimes, a prospective projects lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark .1/26/2012 Free template from www.brainybetty.com 9
  10. 10. Methods Are Used In Capital Budgeting • Accounting rate of return . • Net present value . • Profitability index . • Internal rate of return . • Modified internal rate of return . • Equivalent annuity .1/26/2012 Free template from www.brainybetty.com 10
  11. 11. Zero Base Budget • Start each budget period afresh-not based on historical data . • Budgets are zero unless managers make the case for resources-the relevant manager must justify the whole of the budget allocation . • means that each activity is questioned as if it were new before any resources are allocated to it .1/26/2012 Free template from www.brainybetty.com 11
  12. 12. • Zero based budgets are designed to prevent budgets creeping up each year with inflation .1/26/2012 Free template from www.brainybetty.com 12
  13. 13. ADVANTAGE OF ZBB • Forces budget setters to examine every item. • Allocation of resources linked to results and need • Develops a questioning attitude • Wastage and budget slack should be eliminated • Prevents creeping budgets based on previous year’s figures with an added on percentage.1/26/2012 Free template from www.brainybetty.com 13
  14. 14. DISADVANTAGE OF ZBB • It a complex time consuming process . • Short term benefits may be emphasized to the detriment of long term planning . • Affected by internal politics - can result in annual conflicts over budget allocation .1/26/2012 Free template from www.brainybetty.com 14
  15. 15. PURCHASING • Purchasing refers to a business or organization attempting for acquiring goods or services to accomplish the goals of the enterprise. • Though there are several organizations that attempt to set standards in the purchasing process .1/26/2012 Free template from www.brainybetty.com 15
  16. 16. PURCHASING SYSTEM • A method used by businesses to buy products and/or services. • A purchasing system manages the entire acquisition process, from requisition, to purchase order, to product receipt, to payment . • A popular purchasing system is based on economic order quantity model .1/26/2012 Free template from www.brainybetty.com 16
  17. 17. • Purchasing systems are a key component of effective inventory management in that they monitor existing stock and help companies determine what to buy, how much to buy and when to buy it .1/26/2012 Free template from www.brainybetty.com 17
  18. 18. PRINCIPLES OF PURCHASING • Right quality . • Right quantity . • Right price . • Right time . • Right source of supply .1/26/2012 Free template from www.brainybetty.com 18
  19. 19. • Right quality:- • The house keeping department is responsible for providing best services to the guest ,safe ,Attractive and luxurious environment. • To provide a best service to a guest the department should supply a good quality products to the guest room and public areas. • The particular items which we’re going to provide to a guest should1/26/2012 Free template from www.brainybetty.com 19
  20. 20. • Right quantity:- • Placing a purchase order of right quantity is very important for any organization . • A supplier’s lure of huge discounts for large quantities should not influence the department’s decision .1/26/2012 Free template from www.brainybetty.com 20
  21. 21. • The following factors should be kept in mind when ordering the right quantity of material. • The cost of the order being placed . • Stock levels and order points . • Buffer stocks . • Budgetary controls . • Quantity discounts .1/26/2012 Free template from www.brainybetty.com 21
  22. 22. • Right price :- • To get the material on a right price is very important for Housekeeping or any department . • Before paying the bills it’s very necessary to know the market price of each material . • Before calculating the right price think about the Duties , Taxes , Packaging ,The station of Dispatch . ETC.1/26/2012 Free template from www.brainybetty.com 22
  23. 23. • Right time:- • The material should be made available at the market at right time . • The time also should be right ensuring immediate availability of a particular product in the market .1/26/2012 Free template from www.brainybetty.com 23
  24. 24. • Right source of supply:- • The right source of supply play a very important roll . • The right source of supply is critical to the execution of the other principles of purchasing . • The selection of ideal supplier is very important for both the Housekeeping and the Purchase department .1/26/2012 Free template from www.brainybetty.com 24
  25. 25. Stage of purchasing • Pre – order stage . • Post – order stage .1/26/2012 Free template from www.brainybetty.com 25
  26. 26. • Pre – order stage:- • Receipt of purchase indent . • Floating of enquiries . • Procurement of samples for approval . • Quotation and ordering .1/26/2012 Free template from www.brainybetty.com 26
  27. 27. Types of purchasing • Formal buying / competitive – bid buying . • Wholesale buying . • Negotiated buying . • Cash on delivery buying . • Auction buying . • Blanket order purchasing . • Daily market purchasing .1/26/2012 Free template from www.brainybetty.com 27
  28. 28. • Contract purchasing order / system contract . • Stockless purchasing . • Cash and carry method . • Total plus purchasing . • Centralized purchasing . • Weekly / fortnightly purchasing . • Purchasing from van sales .1/26/2012 Free template from www.brainybetty.com 28
  29. 29. • Post – order stage:- • Issue of purchase order . • Confirmation of receipt of purchase order . • Follow up . • Dispatch advice . • Receipt note . • Payment .1/26/2012 Free template from www.brainybetty.com 29
  30. 30. Phases of budgeting control • Planning stage • Forecasting • Evaluation phase1/26/2012 Free template from www.brainybetty.com 30
  31. 31. PLANNING • This is the process of preparing the operating plans to achieve the predetermined objectives . • The setting of objectives is fundamental to the generation of a budgeting business cycle . • The objective can be general or specific , short-term or long-term.1/26/2012 Free template from www.brainybetty.com 31
  32. 32. FORECASTING • Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. • This is typically based on demand for the goods and services it offers, compared to the cost of producing them .1/26/2012 Free template from www.brainybetty.com 32
  33. 33. EVALUATION • Evaluation is the comparison of actual impacts against strategic plans . • It looks at original objectives, at what was accomplished and how it was accomplished . • Evaluation is inherently a theoretically informed approach . • Evaluation is systematic determination of merit, worth, and significance of something or someone using criteria against a set of standards .1/26/2012 Free template from www.brainybetty.com 33
  34. 34. 1/26/2012 Free template from www.brainybetty.com 34
  35. 35. WAGE • A wage is a compensation, usually financial, received by workers in exchange for their labor . • Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees • Compensation is a monetary benefit given to employees in return for the services provided by them.1/26/2012 Free template from www.brainybetty.com 35
  36. 36. • Investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company . • Forecasting also provides an important benchmark for firms which have a long-term perspective of operations .1/26/2012 Free template from www.brainybetty.com 36
  37. 37. Linens The exec. housekeeper is responsible for the storage, issuing, use and replacement of three main types of linen inventories • Bed - sheets, pillowcases, mattress pads or covers . • bath - bath towels, hand towels, specialty towels, wash cloths, fabric bath mats . • table - table cloths, napkins, banquet linens for F&B .1/26/2012 Free template from www.brainybetty.com 37
  38. 38. 1/26/2012 Free template from www.brainybetty.com 38
  39. 39. 1/26/2012 Free template from www.brainybetty.com 39
  40. 40. 1/26/2012 Free template from www.brainybetty.com 40
  41. 41. Cost Control In Specific Area • Guest room and public areas . • Linen rooms . • Stores . • Horticulture .1/26/2012 Free template from www.brainybetty.com 41
  42. 42. Guest Rooms:- • Staff must be trained to use cleaning supplies and equipment efficiently and economically . • Wastage can often be reduced be physical observation and analysis of stock record . • Multi skilled staff and giving them proper training to retain them controls expenses .1/26/2012 Free template from www.brainybetty.com 42
  43. 43. 1/26/2012 Free template from www.brainybetty.com 43
  44. 44. • Saving of electricity . • Amenities should be placed in guest room only after getting information . • Public areas can have motion sensors to control power consumption . • In VIP rooms ,replace only those flowers that are shedding petals instead of changing the entire arrangement .1/26/2012 Free template from www.brainybetty.com 44
  45. 45. Linen room • Old white sheets may be cut up and used in Banquet halls as table clothes. • Old shower curtains can cut and stitched into Aprons for butchery department . • Condemned towels can be turned into dusters and mops .1/26/2012 Free template from www.brainybetty.com 45
  46. 46. Stores • Effective stock taking and cost must be ensured . • Physical inventory of stores is very important . • Stores keys should be provided to a particular person who is authorized to open and close the store .1/26/2012 Free template from www.brainybetty.com 46
  47. 47. Horticulture • A sprinkler should be installed for watering the lawn instead of using hose pipes . • Dead plants, leaves can be composed. • This saves fertilizer cost as well a making efficient use of waste .1/26/2012 Free template from www.brainybetty.com 47
  48. 48. 1/26/2012 Free template from www.brainybetty.com 48
  49. 49. MIRR • MIRR (Modified Internal Rate of Return) . • It is a financial measure used to determine the attractiveness of an investment . • It is generally used as part of capital budgeting process to rank various alternative choices . • MIRR is modification of the financial measure Internal Rate of Return (IRR ).1/26/2012 Free template from www.brainybetty.com 49
  50. 50. • MIRR makes an explicit assumption about the rate of investment . • IRR is not made to calculate negative cash flows after the initial investment . • The modified internal rate of return assumes all positive cash follows are re-invested to the terminal year of the project .1/26/2012 Free template from www.brainybetty.com 50
  51. 51. 1/26/2012 Free template from www.brainybetty.com 51
  52. 52. 1/26/2012 Free template from www.brainybetty.com 52

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