Critical Analysis of Management Accounting at Harriot Hotel (LCBB5002)

This report provides a comprehensive analysis of the management accounting practices at Harriot Hotel, a multinational hotel group. It begins with an introduction to management accounting and its importance in decision-making, followed by an overview of Harriot Hotel's operations and the impact of the COVID-19 pandemic on its financial performance. The main body of the report identifies and analyzes various types of costs incurred by the hotel, including employee wages, advertising costs, interest on loans, housekeeping supplies, customer discounts, and stationeries. A critical analysis of these costs is conducted using the PER methodology, evaluating their impact on the hotel's profitability and providing recommendations. The report concludes by summarizing the key findings and emphasizing the significance of effective cost management in the context of the challenges faced by the hotel industry. References are provided in Harvard style.

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Overview of company ................................................................................................................1
Type of cost.................................................................................................................................2
Critical analysis...........................................................................................................................3
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Management accounting is also define as managerial accounting, which is refers to the
systematic procedure of providing information and resources to the managers in the decision
making process. Management accounting is the aspect that is used by only internal team of the
organisation and this is the only things which makes it different form the financial accounting.
This has been associated with the financial informations and report such as invoice, balance
sheet etc. that are provided by the finance department of the company to the management team
so that this data can be used for better and appropriate decision, controlling over enterprise and
planing for activities and developments(Abdusalomova, 2020). Cost is define as the monetary
value which is pent by the company in order to produce something and to run all functions
effectively. There are various type cost which is utilised by the company for generating higher
income. The below report is based on Harriot hotel developed in 1941 by john D. brockville, in
current scenario it is an key player in hotel industry across the globe. This company has been
using several fixed and variable cost that help in accomplish its goals with higher revenue.
Moreover, business in the accommodation and food services in UK has been faced the decrease
in footfall in the last days due to the impact of COVID-19.
MAIN BODY
Overview of company
Harriot hotel is an American based multinational hotel group which has been established
by john d. brockville in 1941. this is one of the key player and leader in the global hotel industry
with key operations in the America, Europe, Asia and Africa. It has been used the aggressive
expansion strategy which is financed by major international banks in order to get the rapid
expansion of the business globally so that success and growth can be achieved effectively. But
the due to the recently the covid-19 pandemic, the leading government of the several nations
impose lock and has not allow people to move to different place which leads to the decrease in
revenue of the company. The CEO of Harriot has made the statement during the annual general
meeting that has been conducted virtually “ this year is the worst year ever for the business”.
However in order enhance the productivity and to make the business again on track, hotel has
been maintain its expansion strategy while formulating strategies such they have been focusing
on the increasing room capacity along with cost cutting strategy in order to reduce looses.
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Type of cost
Employee wages: This is refers to the compensation provided to the employees in return
to their efforts in accomplishment of organisational goals. It is also define as the fixed amount
which is paid by the company in exchange for employee's services. Moreover as per the
employment standard legislation has been state that employees has to be receive minimum wage
in return of the work they have completed for the company(Johnstone, 2020). In this harriot
hotel is providing 15000 wages to its employees which is 25% of revenue and this is cost which
has been generating most of the revenue for the company.
Advertisement cost: This is has been included in the management accounting which has
been associated with promoting and industry, entity, brand, product and services. They have
covered ads in print media, broad cast time, radio time and online venues along with direct mail
advertisement. In this harriot hotel has been spending 7000 on advertisement in order to aware
people about hotel and its brand name and higher customers base can be attracted. Which is the
12% of revenue as per the situation of pandemic this is very high.
Interest on loans: Interest is the price which has to be paid by the company to borrow
money from someone else, it can be bank or any other investor. Bank expected to be paid in
return to their service and the risk they take while lending money(Gunarathne, Lee and Hitigala
Kaluarachchilage, 2021). This reflects that company has to pay back the money which they
borrowed along with some additional money which is known as interest. Hotel has been taken
loan and need to pay 10000 as interest and this is the 17% of revenue as this fund is used for the
expansion and strategies which help company in to generating higher profit.
House keeping and cleaning supplies: Housekeeping is define as the management duty
and responsibility which is associated with the cleaning, cooking, maintenance etc. and this is the
most important duty within the hotel industry as there is a separate department for the
housekeeping staff(Fleischman and McLean, 2020). In which they have need various equipment
that has been used by the hotel for maintaining cleanliness and hygiene in order attract more of
the customers. In this hotel is spending 5000 for cleaning supplies and this 8.3% of revenue .
Customers discount: This is define as the strategy which is used by the company in order
increase the customers base and sales. With help of strategy will will successfully obtain loyal
customer base for the longer period of time. For providing discount to the customers, company
need to cut its profit for the product and services. In this hotel cost for discounting customer is
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8000 that is 13.3% of revenue which is moderate as to brinmg the business on track this is
effective strategy.
Stationeries: In hotel industry, interior is the most important thing as this has been
increase the customer satisfaction along with this, it also act as the benchmark for the levels of
service, quality and comfort which has been expected by the guest(Ostaev and et.al, 2020).
Front desk stationeries are also the part of this, in which it includes desk computer, register to
record entries, exited antique pieces etc. through which customer feel the hotel quality and
standards. For this company has been using 3000 cost which is 5% of revenue.
Critical analysis
As per the above analysis it is measured that company has been using the appropriate cost
from which it has been getting the adequate revenue that is going to be contribute in the success
of the company. For the critically analysis of the cost, PER methodology has been going to be
utilise so that appropriate result can be gain along with its, advantages and disadvantages. In this
PER stands for point- explain- relate.
Point: advertisement cost
Explain: In this harriote hotel, advertisement cost is 7000 which is 12% of revenue
which is high, it reflects that company has been spending its 12% of revenue on advertisement is
questionable as this is not needed at the time of pandemic situation as people will not going to
visit hotel for longer period of time(FUADAH and et.al, 2020). This item of cost may be fixed or
variable, in which this cost is need to be cut by not adding new method for advertisement.
Company should continue with the existing method of advertisement until hotel did not
introduce something new in its services. Moreover, it is necessary for the company on focus on
its expansion strategy in order to obtain the growth and higher revenue so that business come on
track again. Along with this, the existing advertisement which is essential to perform for making
people aware about hotel is a fixed cost in nature.
Relate: This is necessary for the company to cut down its cost for advertisement as in the
situation of the COVID-19 pandemic it is not essential for company because there is an lock
induce by governments globally(DO and et.al, 2020). This will help hotel in to save its cost
which can be used in other things that going to help in to enhance proficiency.
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CONCLUSION
As per the above report it has been concluded that, management accounting is refers to
the process which is associated with providing information and resources to manager for
decision making. During COVID-19 uk hotel industry has been experienced the reduction in
footfall sue to which revenue of hotel get decreased but after this, it is important for the company
to use resources effectively in order to get the business on track again. Such as advertisement
cost which need to decrease so that it can be used on other area.
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REFERENCES
Books and Journals
Abdusalomova, N., 2020. Principles of ties of internal control and management accounting
systems at the enterprises of black metallurgy. Архив научных исследований, (2).
DO, T.H., and et.al, 2020. Relationship between the management accounting information usage,
market orientation and performance: Evidence from Vietnamese tourism firms. The
Journal of Asian Finance, Economics, and Business, 7(10), pp.707-716.
Fleischman, R. and McLean, T., 2020. Management accounting: theory and practice. Routledge.
FUADAH, L.L., and et.al, 2020. Determinant Factors' Impact on Managerial Performance
through Management Accounting Systems in Indonesia. The Journal of Asian Finance,
Economics, and Business, 7(10), pp.109-117.
Gunarathne, A.N., Lee, K.H. and Hitigala Kaluarachchilage, P.K., 2021. Institutional pressures,
environmental management strategy, and organizational performance: The role of
environmental management accounting. Business Strategy and the Environment, 30(2),
pp.825-839.
Johnstone, L., 2020. A systematic analysis of environmental management systems in SMEs:
Possible research directions from a management accounting and control stance. Journal
of Cleaner Production, 244, p.118802.
Ostaev, G.Y., and et.al, 2020. Assessment of the effectiveness of the management of agricultural
organizations in management accounting. Amazonia Investiga, 9(28), pp.260-271.
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