Week 8 EOC: Chapter 8, Question 4

Answers: 

a.  In October 2009 total revenues were $545,000 and in October 2010 total revenues were $583,000.  

b.  In October 2009 GOP was $162,000 and in October 2010 GOP was $184,550.

c. The GOP Percentage in October 2009 was 29.72% and GOP Percentage in October 2010 was 31.66%.

d.  According to (Pg. 297; Managerial Accounting for the Hospitality Industry) "When it is high (over 50%), it usually reflects efficiency on the part of management in converting additional revenues into additional profits." Santi's hotel achieved a flow-through percentage of 59%. A "Flow-through was created by managerial accountants to measure the ability of a hotel to convert increases in revenue directly to increases in GOP." (Pg. 296; Managerial Accounting for the Hospitality Industry) So, My assessment on the percentage would be that Santi's hotel achieved a high flow-through percentage. (Pg. 297; Managerial Accounting for the Hospitality Industry) "Understanding the flow-through characteristic of a specific hotel helps management better understand the importance of incremental levels of revenue and thus the importance of utilizing truly effective revenue management techniques."