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Management Accounting - Qbic hotel Assignment

   

Added on  2021-02-21

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Management Accounting
Management Accounting - Qbic hotel  Assignment_1

Table of ContentsINTRODUCTION .....................................................................................................................3LO1.............................................................................................................................................3P1 Explaining management accounting along with their essential requirements ................3P2 Assessing the use of managerial reporting in decision making .......................................5LO 2........................................................................................................................................6P 3 Calculation of Income statement under Marginal costing and Absorption costingmethod....................................................................................................................................6LO 3..........................................................................................................................................12P 4 Advantages and Disadvantages of planning tools used by budgetary control...............12LO 4..........................................................................................................................................14Comparison between different organizations regarding how they are adapting managementaccounting for dealing with their financial problems...........................................................14Managerial accounting leads business enterprises towards sustainable success..................15Evaluation of how planning tools for accounting respond suitably for solving Financialproblems to lead organizations to sustainable success.........................................................16CONCLUSION........................................................................................................................16REFERENCES.........................................................................................................................18
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INTRODUCTION In the context of business, management accounting (MA) plays a significant role indecision making. Now, managers lay focus on tracking business performance with the motiveto develop suitable or competent strategic framework. This in turn helps firm in attaininggoals and gaining competitive position over others. The present report is based on Qbic hotelwhich offers accommodation services to the customers. In this, report will provide deeperinsight about MA tools which business units undertake for reporting purpose. Besides this, itwill shed light on the manner in which MA report aid in profitable decision making. It alsodepicts the use of costing system namely absorption and marginal in the assessment of costand profitability aspects. Report also presents MA tools that can be used by Qbic for planningpurpose. It also entails how MA techniques assist in responding financial problems. LO1P1 Explaining management accounting along with their essential requirements Management accounting may be defined as a process which lay focus on analyzingbusiness cost and operations for preparing internal financial report. “Management accounting is the discipline which deals with the gathering, sorting, andprocessing of financial, and non- financial information in order to produce reports that addvalue to the business, and provide insight to the managers who make decisions based on thesereports aiming to concrete the organization’s strategic steering”. This provides managers withsuitable framework for decision making and contributes in goal attainment (Cowton, 2018).There are several management accounting systems which Qbic can undertake for ensuringsmooth functioning of operations from both monetary and non-monetary perspective such as:Job costing In MA, this system is highly important which emphasizes on capturing or trackingcost associated with each task. It presents cost of material, labor and overhead associated withproduction aspect. Thus, by summing up all the expenditures total cost of job can beidentified. By dividing total costs from number of units, CPU can be assessed prominently. AdvantagesDisadvantagesOffers detailed information aboutExpensive and time consuming
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cost regarding material, labor andoverheadProfitability of job can be gaugedusing this systemPrevents duplication of workHelps in evaluating quality of work(Job costing: advantages anddisadvantages, 2019)exerciseLack of standardized processCost accounting This system of MA may be served as a framework which firm’s undertake with themotive to make appropriate estimation about product price and performing profitabilityanalysis. Cost accounting system includes fixed, variable, direct and indirect expenditureincurred by the firm. Profit attainment is the main motive of an organization for the purposeof survival and gaining competitive position. In this regard, using such system charge per unitcan be assessed by the manager of Qbic using this accounting system. Hence, by addingprofit margin in per unit charge manager of Qbic can set price for the products or servicesoffered. AdvantagesDisadvantagesAssist in identifying cost per unitand priceFacilitates better monitoring andcontrolling of labor costs Ensures profit maximization byeliminating waste, losses andinefficiencies (Cost accounting:advantages and disadvantages,2019)Leads problem in relation to underor over absorption of overheadFocuses on past performance,whereas management is concernedabout future Imposes more expense due to highmaintenance associated with theinstallation of cost accountingsystem Inventory accounting This system of MA includes several tools which help in taking appropriate decisionabout stock such as LIFO, FIFO, economic order quantity (EOQ), just in time (JIT) etc. In thecontext of business unit, effectual inventory management is highly required for controllingcost and enhancing profitability aspect (de Campos and Rodrigues, 2016). Thus, Qbic shouldemploy EOQ which clearly entails stock that need to be maintained within the firm formeeting customer’s requirements. By using this tool firm can avoid unnecessary costassociated with holding and ordering aspects.
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AdvantagesDisadvantagesHelps in reducing cost andimproving profitabilityEnsures better stock management Time consuming exercise Requires detailed assessment Price optimization system This system or software enables Qbic to evaluate customer’s responses at differentprice level pertaining to the services offered. By this, manager of Qbic can set suitable priceof the services and thereby would become able to attract large number of customers. Hence,such system of MA helps in setting competent pricing framework and thereby ensurescompetitive advantage (Malina, 2018).AdvantagesDisadvantagesFacilitates price fixation Helps in building and sustainingcompetitive positionImposes cost in front of companyregarding maintenance, training &development of personnel Requires highly skilled personnel forsuch mathematical analysis P2 Assessing the use of managerial reporting in decision making Managerial reports include budget, job cost, accounts receivable aging, inventory etcwhich provides information about departmental performance. In the recent times, managerialreports are highly significant from the perspective of decision making in relation to trim cost,rewarding best performing employees as well as resources. There are several managerialreports which can be undertaken by Qbic for the purpose of decision making such as:Budget report: Manager can make assessment of departmental performance using thisreport. Moreover, it clearly exhibits deviations which take place in departmentalperformance. Hence, considering this report manager can assess reasons behind deviationsand thereby would become able to take corrective measures on time (de Campos andRodrigues, 2016). In other words, budget report helps Qbic in making appropriate estimationabout income & expenses pertaining to proposed budget. Further, with the help of such reportmanager can provide employees with suitable incentives. Through this, training &development need of personnel can also be assessed.Job cost report: This report provides high level of assistance to the manager inevaluating profitability. In this, actually generated revenue is compared in against to the
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actual one. By this, manager of can Qbic identify areas where resources should be usedinstead of wasting time and money on low or unprofitable projects. Inventory report: Manager of Qbic can make manufacturing process more efficientby using stock report. Moreover, such report provides information stock wastage, hourlylabor and overhead cost etc. Thus, referring this, different assembly lines can be comparedeffectually and best performing departments identified (Managerial accounting reports,2019). Accounts receivable aging report: By taking into account this report hotel unit canmanage its cash flow more effectually. Moreover, such report gives clear indication to thefirm that whether credit should be extended to the customers or not. It clearly highlightscustomer balances and thereby helps in assessing amount they owed. Through this, managerof hotel unit can track days within which debtors are making payment. By using thiscompany can find out problems exist in cash collection process. In the case of high defaults,firm should tighten its credit policies. Referring all the aspects it can be stated that accountreceivable aging report helps in assessing or evaluating company’s debt level. LO 2P 3 Calculation of Income statement under Marginal costing and Absorption costing methodCost can be defined as the total expenses incurred by the company in order to knowthe cost incurred in the production of goods. The cost consists of various expenses such asraw material cost, labor cost and overheads cost (Pearce, 2016). Cost analysis relationship isdefined as the relation between cost of input by company and output of goods. On the basis of level of activity cost can be divided in two parts i.e. Fixed cost andvariable cost. Fixed cost remains at every level of activity in the company and does notchange with the change in the level of activity (Nas, 2016). Variable costs are defined as thechange in the variable costs with the change in the level of activity in the company. Normalcosting can be defined as the actual cost occurred in the company at the time of production ofgoods. Standard costing is the method of setting up set targets by the management in order toachieve those budgets and then compare with the actual cost of the company.Meaning of Marginal costing and Absorption costing
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