Free Accounting Dissertations - Danish Holidays Danish Holidays Is A Travel Company Specialising In
Title: Danish Holidays
Danish Holidays is a travel company specialising in selling holidays in Denmark to UK market.
Profit & loss Account 2005
Appendix I shows the data used in the preparation of the profit & loss accounts for the year 2005. Danish Holidays sold a total of 9900 packages in 2005.
Contribution is sales minus variable costs associated with sales. Danish Holidays has four variable costs commission paid to agents, ferry crossings, accommodation costs in Denmark and other administration costs.
Danish Holidays pays 5% commission to agents. Higher the price per holiday, higher would be commission but so would be the remaining 95% of price. So higher sales price per person would lead to both higher commissions paid to agent and contribution per person.
Ferry crossings costs per person also vary with seasons with lowest costs of £51 in Q1 and Q4 and highest costs of £91 in Q3. If sales price per holiday were fixed, then higher ferry crossings costs would lead to lower contribution.
Like ferry crossings costs, accommodation costs also vary with seasons. Accommodation costs were given in Danish Kroner and a constant Danish Kroner to Sterling rate of 10.6:1 was used to convert them into Sterling.
Other administration costs were fixed at £20 per person. Any increase or decrease in sales price would lead to same change in contribution per person.
Appendix II shows the contribution per person for four quarters.
Commission costs per person at £12.1 were lowest in Q4 and were highest at £22.6 in Q2. This was due to lowest and highest cost per person in Q2 and Q4 respectively. Contribution after commission costs only was highest in Q2 and lowest in Q4.
Contribution after commission costs and ferry crossings was highest in Q2 at £357.5 and lowest in Q4 at £178. Also the gap between Q2 and Q3 contribution has increased due to higher ferry costs in Q3.
After deducting accommodation costs, the highest and lowest contribution is still achieved in Q2 and Q4 respectively. But the second and third positions were reversed. Now Q1 has second highest contribution per person due to much higher accommodation costs in Q3.
The contribution pattern didn’t change after deducting other administration costs as they were fixed at £20 per person.
Contribution per person was highest in Q2 at £183.5 and lowest in Q4 at £22.1 Q2 contribution per person was more than eight times that of Q4. Contribution per person was £101.7 and £60.3 in Q1 and Q3 respectively.
Appendix III shows total contribution per quarter and also the annual total.
Its revenues are dependent on two things number of packages sold and the price of each package. Like most of the travel agencies, Danish Holidays’ revenues fluctuate significantly with seasons. Both price and number of packages sold vary with seasons. Q3 had highest sales at £1,837,700 and Q1 had lowest sales at £361,200.
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