Financial Management & Budgeting Flashcards

Which of the following is classified as a fixed cost in hotel operations?

Answer: Property insurance premiums

Property insurance premiums remain constant regardless of occupancy level, making them a fixed cost.

A budget variance analysis shows actual spending was $12,000 versus a budgeted $10,000. This is best described as a:

Answer: Unfavorable variance of $2,000

When actual costs exceed budgeted costs, the variance is unfavorable (adverse) because more was spent than planned.

In the Uniform System of Accounts for the Lodging Industry (USALI), which department is typically listed first?

Answer: Rooms

Under USALI, the Rooms department is listed first as it is typically the largest revenue-generating department.

EBITDA stands for earnings before interest, taxes, depreciation, and:

Answer: Amortization

EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization — a common measure of operating performance.

A hotel manager uses the '52/48 rule' for labor scheduling. This primarily helps control:

Answer: Overtime expenses

The 52/48 scheduling rule staggers shifts to minimize overtime by ensuring 52 hours of coverage with 48-hour employee schedules.

Which ratio measures how efficiently a hotel converts revenue into profit by comparing net income to total revenue?

Answer: Net profit margin

Net profit margin = (net income ÷ total revenue) × 100, showing the percentage of revenue retained as profit.

In capital budgeting, the payback period is defined as:

Answer: The time required to earn back the initial investment from cash flows

The payback period is the length of time needed to recover the original capital investment from net cash inflows.