About Budget Lines
Budget lines mimic your current operational chart of accounts. To create your profit and loss tree in Budgeting, budget lines must be created in all levels including the organization level, revenue center level, job class levels, etc. The income and expense line items are assigned dollar and/or percentage amounts. The ultimate goal of Budgeting is to calculate total dollars for every line in the budget.
About Budget Line Data
Budget line data is the result of the calculations as configured in the Cost Structure tab. The data is viewed in the Results tab.
In order to calculate total dollars, the following formula is used:
Total Dollars = Units x Rate x Factor + Fixed Dollars
Units
Units represent how many "things" the line will use in the calculation. For example, rooms, hours, covers, etc. are all units. Units are typically generated by the forecasting process.
Rate
Rates are the dollar amount with which the units are multiplied to calculate revenue. If you are selling your rooms in January for $110.00, that is the rate.
Factor
Factors are additional multipliers you can use to adjust for varying circumstances.
Fixed Dollars
Fixed dollars are additional amounts that are not affected by the number of units. For example, your telephone bill may be $500/month for basic service with an additional charge of $.05 per occupied room. The fixed dollar amount is the $500/month.
About Budget Line Types
The various budget line types allow you to configure Budgeting to match your property's needs.
Total Lines (T)
Total lines are used to group lines in an organized manner and to build the budget tree structure. Total lines are made up of other lines (children) and serve as a summarization of these lines.
Calculated Lines (C)
Calculated lines are used to add or subtract budget lines. For example, if you want the Total Revenue line to calculate the sum of all revenue lines in the budget, you create a formula that designates which budget lines should be added together to give you the total.
Fixed Lines (F)
Fixed lines are used to enter fixed costs such as mortgage payments and fixed revenues such as that derived from leased space.
KBI Lines (K)
A key business indicator (KBI) is a factor that impacts business at your property or is some factor you want to track. KBIs are values, measured in major units of measure (such as covers, rooms, dollars, coin in, guests, etc.), that indicate the activity of your business. Watson uses KBIs to create forecast data and labor standards.
KBI lines are used to calculate revenue/expenses that are based on external factors (KBIs). For example, if you have a budget line called cleaning supplies that needs to be affected by total rooms, the line would be linked to the Total Rooms KBI during configuration.
Job Class Lines (J)
Job classes are functional groups within a department that are used to define specific jobs. Job class lines signify job descriptions and are used to compute the labor portion of expenses. Adding a job class detail line allows you to tie it into the division and department that the job code operates under. It is linked to a job class and the number of hours is linked to labor standards.
Market Segment Lines (M)
A market segment represent a category of rooms and guests. There are four types of market segments: Contract, Group, Transient and Casino. Market segments are used to create market groups which are used as a reporting mechanism to help you track and forecast categories of rooms and guests.
Market segment lines are a summary of the individual marketing segments that were previously forecast day-by-day. These lines behave in the same way as KBI Lines.
Revenue Center Lines (R)
A revenue center is any outlet (besides rooms) that generates revenue. Revenue centers are defined by periods that are associated with KBIs. Typical revenue centers are restaurants, gift shops, lounges, etc. Revenue centers let you gather information about a specific outlet for the purpose of generating a forecast.
Revenue Center lines behave exactly like KBI lines. Typically these lines are attached to revenue lines only, and they are typically used for meal periods in F & B outlets.
Percent of Base Lines (P)
Percent of Base lines calculate their total dollars based on a percentage of dollars from another line(s). For example, the food cost of sales is usually budgeted as a percentage of food revenue. If the line isn't allocated, you can add lines to be used in a calculation.
Percent of Hours (H)
Percent of Hours lines are used to allocate percentages of job class lines to subcategories of labor, such as company and leased labor. This feature enables you to budget separately for company employees and leased laborers and to configure the appropriate rates of pay for each job line. For example, during peak season, a hotel might employ both company employees and contractors as housekeepers. The controller must budget a percentage of regular and overtime hours and wages for each category. The controller can now create two Percent of Hours budget lines: one for company employees and one for contractors.
Percent of Labor (L)
Percent of Labor lines enable you to configure new budget lines that allow a percentage of Hours and Costs to be sourced from a Job class line.
Divider Lines (D)
Divider lines are used to insert blank lines into the budget for grouping purposes. Divider lines do not contain data.