Page 94 - claims information pack ebook_e

Guidelines for presenting claims in the tourism sector

Example
Amount Variability Variable costs
A restaurant may operate at a food cost
£ % £
equal to 35% of sales, have direct costs
equal to 8% of revenue, with half of these Revenue
being variable. In addition half of energy Annual revenue £750 000
costs may be variable and change as
revenue either increases or decreases. Variable costs
Food costs £262 500 100% £262 500
The total variable cost ratio is calculated Direct costs
by taking the revenue and actual cost (rent, transportation etc) £60 000 50% £30 000
figures for the full year prior to the incident. Energy costs £45 000 50% £22 500 17
The total variable cost ratio is then Total variable costs £315 000
applied to the actual decline of revenue
in the claim period to calculate the actual Total variable costs 42%
as a % of revenue
variable cost to be applied to the claim.