Management Accounting: Cost Classification and Analysis

Management
Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Harriot Hotels Brief................................................................................................................3
2. Classification of cost...............................................................................................................3
3. Critical analysis using PER Methodology..............................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Management accounting is a sub-part of financial accounting that helps the organisation
and to managers to identify and control various cost of the activities performed in an
organisation (Ameen and et.al, 2018). Management accounting helps in the identification of the
areas that affects the overall activities of the production. Managers with the use of various
systems of management accounting viz. Cost accounting, inventory management, price
optimisation, etc., analyse and reduce cost drivers and increase the productivity. There are three
types of costs i.e. fixed cost, variable cost and semi-variable cost. The hospitality industry is the
third largest sector of the UK economy and around 3.2 million people working in the hospitality
sector. At the end of month of January 2020 around 10,000 people had infected with the COVID-
19 virus world-wide. Economic activities are severely affected with the entry and exit are
restricted in the areas and countries of the world which cause the hospitality and tourism
industries collapsed globally (Uğur and Akbıyık, 2020).
MAIN BODY
1. Harriot Hotels Brief
Harriot Hotel established by John D. Brockville in 1941. It hotel has grown to be a main
player within the hotel industries globally with their operations in the Americas, Europe, Asia
and Africa. As a result of aggressive expansion strategy financed by loans from major
international banks they have steady growth. Due to outbreak of COVID-19 around the globe,
governments of nations had imposed lock-downs which has ruin the state of tourism and hotel
industry. Harriot hotels has continue its strategy of expansion Mainland China as their hotels
business had hit hard in the cities of America and Europe.
2. Classification of cost
There are types of costs that are classified according to behaviour in the production function viz.
Fixed, Variable and Semi-variable Costs. The cost behaviour is known as the relationship of the
total costs and the activities of production.
Fixed Costs
it is a type of costs which do not change over short period of time. These costs are
increases with the time period viz. Rent. These costs must be paid by the businesses whether
sales are achieved or not (Kamphorst and et.al, 2020).