Question

Which of the following tools would a hospitality manager use to establish prices that would generate a specific profit within a defined span of time?

a) Break-even analysis
b) SWOT analysis
c) Regression analysis
d) Cost-volume-profit analysis

Answer 1

A hospitality manager would employ cost-volume-profit analysis to set prices aimed at achieving a certain profit over a given period by understanding the effects of costs and volume on income.

Step-by-step explanation:

The hospitality manager would use cost-volume-profit analysis to establish prices that would generate a specific profit within a defined span of time.

This tool helps in understanding how variations in cost and volume affect a company's operating income and net income. In cost-volume-profit analysis, one can determine the break-even point .

This method requires a comprehension of fixed costs, variable costs, sales price per unit, and the number of units sold.

Once these are known, the manager can set prices to cover costs and achieve desired profits, based on the relationship between cost, volume, and profit.