Controllable and Noncontrollable Expenses

Chapter 15

Direct Operating Expenses

– What to control– F&B• Flatware, laundry, uniforms, training

– Rooms• Cable, contract services, linen, uniforms

– Others• Lawn care, gas, trash removal, telecom

– How to control them• Due dates, correct license, use of resources

Direct Operating Expenses

– Inventory “stuff” periodically and have a replacement plan, don’t get surprised

– Control things like phone usage, don’t get scammed, be aware of your expenses

– Music & entertainment expenses• Type of music

– Live, “elevator music” , entertainers, riders, meals

– Marketing expenses• Agency fees• Internet • Print• Signage

Direct Operating Expenses

Marketing expenses• Travel expenses• Donations• Dues • Gift card

– Utilities expenses• Electricity, water, gas other fuel• Conservation – self vs. mandatory

– Administrative & general expense• Insurance• Office supplies• Comm systems

Direct Operating Expenses

– Administrative & general expense• Credit card %• Human resources• Security• Travel

– Repairs & Maintenance expenses• Controllable or not• Painting, renovation• Equipment repair

– Preventative maintenance plan– As it breaks

• Cleaning schedule

Direct Operating Expenses

– Occupation expenses• Rent• Property taxes

– Depreciation• Noncash expense – does not cost cash but rather is

expense• Straight line method

– Page 297– Recorded as a expense annually or over that same time period

• Accelerated method– Double declining method

Bottom line is less tax to pay because of devalue

Direct Operating Expenses

– Interest• Amount charged to a borrower for the use of money• Is an expense• Tax deductable but and expense