Management Accounting - Barry House Hotel
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Added on 2020-01-07
Management Accounting - Barry House Hotel
Added on 2020-01-07
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Management Accounting
INTRODUCTIONIn the present era, business organizations are facing high level high level ofcompetition which in turn places direct impact on their profitability aspect. Hence, it is highlyrequired for the firm to employ management accounting tools and techniques. Moreover,managerial accounting and reporting provide manager with the valuable framework fordecision making. In this, by making thorough analysis of reports business entity can makesuitable changes in the existing framework and thereby aid in the growth of firm. The presentreport is based on Barry house hotel that offers accommodation services to the customers atsuitable prices. Thus, the major focus of such report is to present the significance ofmanagement accounting tools in the context of hospitability business unit. Further, it will alsoshed light on the different types of budgeting system which in turn helps in making effectiveuse of financial resources.P1 Explaining management accounting and its different types Management accounting lays high level of emphasis on making use of financial dataand preparation of suitable reports. Hence, such reports provide high level of assistance to themanager of firm in taking suitable decision that make contribution in the organizationalgrowth and development. For making accurate and timely day to day business decisionsmanager of Barry House requires enough financial as well as statistical information. Hence,the main objective of management accounting is to assists manager in devising andevaluating goals. Thus, information that contains in the managerial report helps both highermanagement and employees in taking strategic action (Kaplan and Atkinson, 2015). Alongwith this, such accounting focuses on present performance and helps in making properforecast about the near future. It furnishes monetary and company goal driven information.By considering all the above aspects it can be stated that Barry House hotel should employmanagement accounting tactics which in turn helps in making competent framework.There are several types of management accounting system that Barry House hotelneeds to undertake for making effectual use of finance is enumerated below:Inventory management system: Barry House hotel can ensure effectual use offinancial resources by using the inventory management system. In the present time,business units which are operating in the hospitality sector has to offer more servicesalong with the accommodation (Wijaya and et.al., 2015). In this, managers of the
hotel unit has requirement to maintain proper inventory records. Moreover, holdingand ordering cost has greater influence on the profit margin of firm. Thus, by usingthe inventory management system and software hotel unit can assess the stock levelwhich it needs to maintain within the firm. By undertaking such system manager canavoid the situation of excessive inventory to a great extent. Further, manager of BarryHouse hotel can also identify the level of inventory for which it needs to place orderby using economic order quantity method. This method of inventory management andcontrol is highly significant which in turn helps in tracking or maintaining the costlevel. Job costing system: This costing method involves the money which is incurred by thefirm on material, labor and overhead in relation to the specific job. By using suchcosting method manager of Barry House can track the cost level. This in turn enablesbusiness unit to take suitable action so cost can be reduced in later jobs. Such costingmethod places high focus on maintaining the record of both direct and indirect costlevel. Example of direct cost includes pick and drop expenses, other material for thewelcome of guests etc (Fullerton, Kennedy and Widener, 2014). On the other side, indirect expenses which hotel unit incurs include promotional,electricity and other utility, miscellaneous expenses etc. In this, by making continuousmonitoring of expenses that is associated with specific job manager of Barry House can findout most effectual ways to perform. For instance : By making assessment it has been assessedthat promotional expenses of hotel unit are increased significantly as compared to theprevious aspect. In this, by making in-depth investigation manager of the hotel unit can assessthe effectual mode of advertisement. In this way, by developing awareness among the peopleregarding accommodation services hotel unit can enhances customer base and there byprofitability aspect. Price optimization system: This system is highly significant which in turn assists inevaluating the responses of individual on varied price level. Now, people takesdecision about accommodation after conducting evaluation of price and servicesoffered. Along with this, such system also helps in getting information about the pricewhich customers are ready to pay for accommodation services (Fullerton, Kennedyand Widener, 2013). In this way, price optimization system assists in evaluating thedemand and setting suitable price for the services offered. Thus, price optimization
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