Report on Tools and Techniques of Fund Management
Added on 2020-06-04
15 Pages4412 Words51 Views
Management Accounting
INTRODUCTIONManagerial accounting is highly concerned with the collection of data related to theinternal operations and functions. In this, management accountant plays a vital role inanalyzing and evaluating data set. Thus, by making internal evaluation manager developssuitable framework for the maximization of both productivity and profitability. In the presenttimes, use of management accounting tools and techniques are increased significantly for thepreparation of budget, cost as well as profit analysis. For the concerned project Barry Househotel has been selected that offers accommodation facility to the customers. Now, company isinterested in using management accounting tools with the objective to control cost andenhance margin. Moreover, such hotel unit can offer suitable and high quality services to thecustomers at affordable prices only when it has good control over cost. Thus, report willentail the tools and techniques that hotel unit needs to undertake for ensuring effectivemanagement of funds. Besides this, it will also shed light on the costing systems and planningtools that prove to be more beneficial for hotel.P1 Presenting management accounting tools and their requirements in the context of BarryHouse To Management Team Barry House HotelDate: 3rd December 2017Subject: Management Accounting SystemsIntroduction: The present report highlights the system of MA that aid in organizationaldecision making, growth as well as success. TaskManagement accounting is the process of collecting, analyzing, interpreting andcommunicating results that are associated with the internal business operations. In the contextof business unit system of MA is essentially required for the purpose of effective decisionmaking. Hence, by using the tools of management accounting business organization canevaluate performance and take cost effective measures that maximizes both sales as well asprofit margin. Cost accounting: It may be served a process that assists in controlling cost through themeans of recording, categorizing, summarizing and evaluating differences. In other words, itcan be depicted that cost account is used by the business unit for the ascertainment, allocationand distribution of cost. By undertaking such formal mechanism, firm can take decision aboutdecision and become able to make use of financial resources optimally (Saladrigues and
Tena, 2017). Pros: It provides necessary or relevant cost information and helps in exert control onwastage to a great extent. In addition to this, through using the data set of costaccounting comparison can be done in relation to periods, volume of output,determent and process. Further, cost accounting tool of MA also disclose informationabout both profitable and non- profitable areas (Ward, 2012). Hence, by gettinginformation about profitable areas firm can take decision regarding expansion.Cons: For the installation and maintenance of cost accounting system within the firm,hotel unit requires more money and manpower. Moreover, cost accounting can bedone or performed by the personnel who have exceptional knowledge pertaining tosuch field (Cost Accounting, 2017). Along with this, complexity of system andpointless application is also recognized as a limitation of cost accounting system.Price optimization system: Such system of MA assists firm in understanding the views,expectation and willingness in relation to making payment. In the competitive environmentfirm can attain success only when its prices and offerings are in line with the customer’sexpectation. Thus, by setting optimal prices hotel can attract more customers and therebyenhance sales revenue. Once loyalty has built among the customers regarding the services ofhotel unit then it can generate or earn high profit by charging high prices. Pros:Enhancement of customer base Improvement or enhancement in financial performance Cons:High knowledge and evaluation is required (Suomala, Lyly-Yrjänäinen and Lukka,2014)Need competent for dealing with the complex model of price optimization. Inventory management: In the context of hotel unit, satisfaction level of customers is highlyinfluenced from the quality of services offered to them. Along with this, ineffective stockmanagement also may cause of high cost and less margin (Simons, 2013). Thus, by takinginto account the systems such as economic order quantity, just in time (JIT) etc firm canmaintain enough stock. Pros:Reduction in holding and ordering cost Helps in enhancing profit through controlling wastageCons:Need to maintain extensive recordTime consuming activity and stock management software is expensiveConclusion: From overall report it can be stated that systems of MA ensures effectivemanagement of funds. Thus, by using such tools manager can control cost and improvesprofit margin to a great extent. SincerelyManagement Accountant P2 Methods used for managerial reportingTo Management Team Barry House HotelDate: 3rd December 2017
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