The direct cost of each hotel guest at Seaview hotel is $15 per night. The hotel manager has estimated that the average overhead cost per guest is $10 per night, based on 100 guest nights per week. The room price is $50 per night. A large group of 50 people have asked to spend one night at the hotel during a week when only 30 other guests are booked. The group of 50 has offered to pay a price of $20 each. Discuss whether the manager should accept the offer.

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A: Answered:

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.