Week 8 EOC: Chapter 8, Question 4

a. What were the total revenues in October 2009 and October 2010?

b. What was the GOP in dollars in October 2009 and October 2010?

c. What was the percentage of GOP to total revenues in October 2009 and October 2010?

d. What was the flow-through percentage achieved by Santi’s hotel? What is your assessment of that percentage?

Answers: 

a.    The total revenues for both October 2009 and 2010 can be found in the top section of the income statement. "The income statement reports in detail and for a very specific time period, a business’s revenue from all its revenue-producing sources, the expenses required to generate those revenues, and the resulting profits or losses"(Dopson 32). The total revenue for October 2009 was $545,000 and where the total revenue for October 2010 was 583,000.

b.  The gross operating profit can be found in the second section of the income statement."Gross operating profit (GOP) is, in effect, total hotel revenue less those expenses that are considered directly controllable by management."(Dopson 296).The gross operating profit in dollars for October 2009 was $162,000 and the total for October 2010 was $184,550.

c. The percentage of the gross operating profits to total revenues can be found in the second section of the income statement. The percentage of the gross operating profits to the total revenues for October 2009 was 29.71% and where the percentage of gross operating profits to total revenues for October 2010 was 32%.

d.  The flow-through percentage can be found at the very end of the income statement. "Flow-through is a measure of the ability of a hotel to convert increased revenue dollars to increased gross operating profit dollars"(Dopson 296).The flow-through percentage achieved by Santi’s hotel was 59.34%. My assessment of this percentage is good, it shows the manger has done things very efficiently.

Work Cited: 

Dopson, Lea R. Managerial Accounting for the Hospitality Industry. Wiley, 09/2008. VitalSource Bookshelf Online.