Management Accounting Report for Cool Destinations: ACC202 Analysis

This management accounting report analyzes Cool Destinations' financial performance, focusing on profitability, cost analysis, and strategic recommendations. The report begins with an executive summary and table of contents, followed by detailed answers to eight questions. Question 1 examines cost per unit, cost per day, and profitability. Question 2 delves into profitability ratios and hybrid costing systems. Question 3 defines hybrid costing. Question 4 analyzes meal costs. Question 5 discusses cost estimation and pricing strategies. Question 6 calculates profit or loss for tours. Question 7 provides recommendations to improve profitability. Question 8 explores strategic variables. The report concludes with a discussion of key findings and recommendations for Cool Destinations to improve its financial performance. The report uses financial data to provide an in-depth analysis of the company's operations. It examines various cost elements, revenue streams, and profitability measures to assess the company's overall financial health and provide insights for strategic decision-making. The report also analyzes the company's tour operations, including costing, pricing, and profitability analysis, to identify areas for improvement and provide recommendations for enhancing the company's financial performance.

Running Head: MANAGEMENT ACOCUNTING
MANAGEMENT ACCOUNTING

Running Head: MANAGEMENT ACOCUNTING
Executive summary
Management accounting is the process which is used to identify, analyzing recording and
presenting the financial information in order to take the management decisions for future
possibility. The accounts share a detailed overview of how the company like Cool Destinations is
spending on its operations and business and how the cash flow level is in terms of debts and
assets. In order to bring the organization in its top most capacity, the profitability of the company
has been assessed and Snowy Mountains turns out to be the profitable (Giannetti, Magnacca and
Mariani, 2018).

Running Head: MANAGEMENT ACOCUNTING
Table of Contents
Executive summary.....................................................................................................................................2
Question 1...................................................................................................................................................4
Question 2...................................................................................................................................................7
Question 3...................................................................................................................................................8
Question 4...................................................................................................................................................9
Question 5.................................................................................................................................................10
Question 6.................................................................................................................................................11
Question 7.................................................................................................................................................12
Question 8.................................................................................................................................................13
Recommendations.....................................................................................................................................13
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

Running Head: MANAGEMENT ACOCUNTING
Question 1
A) The cost per unit for the accommodation process is $28 in case of the reception and room
maintenance is costing $139.5.
B) Cost per day in case of the reception case is $5.6 and the room maintenance is 427.9.
C) The cost per accommodation payment processed is $88.9
D) The total cost per person on average assuming the five day stay is $8.95.
Fixed Variable costs
Accommodation costs
Reception Room
maintenance
Collection of
accommodation
payments
Staff salaries 50000 105000 60000
equipment Depreciation and insurance 6000 155000 40000
Electricity 3000 5000 2500
Telephone [phone]
Building lease 1200 30000 900
Linen 0 4800 0
Consumables 3000 35000 2000
Total 67200 334800 107400
Cost per unit 28 139.5 44.75
Cost per day 5.6 27.9

Running Head: MANAGEMENT ACOCUNTING
Cost per accommodation 0.7440 0.3136
0.0893 0.4630
0.0446 0.0149
0.0595 0.0000
0.0179 0.0896
0.0446 0.1045
1.0000 0.9857 213260.2
88.9
Cost per day of the room
maintenance 17.77
Assessment of Profitability
Cost per accommodation 107400 44.75
Cost per accommodation per day 8.95
Profit and loss account
Revenue 3600000 4800000
Other income 107400 107400
Cost of accommodations
Staff salaries 155000 165000
Equipment Depreciation and insurance 161000 195000
Electricity 8000 7500

Running Head: MANAGEMENT ACOCUNTING
Telephone [phone]
Building lease 31200 30900
Linen 4800 4800
Consumables 38000 37000
402000 442200
Evening Meals
Cost Kitchen servcie restaurant
Staff Salaries 50000 30000
Equipment 20000 25000
Electricity 15000 4000
Telephone [phone]
Building lease 1900 4100
88000 64000
Tours
Tour guides 1000 1000
Equipment depreciation 20000 20000
Tour van dep 5000 5000
Fuel and van maintenance 10000 10000
Public Liability insurance 15000 15000
Picnic lunches 28800 28800
Other expenses 6000 6000
85800 85800

Running Head: MANAGEMENT ACOCUNTING
Profit 3131600 4315400
Question 2
Profitability is the terms that are used in determining the financial position of the business in
order to find out any variance and the major aim of any organization is to assess the profitability
of the position. Profitability are financial related measurements that are used by the investors
shareholders, management, suppliers and also customers to quantify and assess the capacity of an
organization to create pay (benefit) with respect to income, monetary record resources, working
expenses, and investors' value during a particular timeframe. They show how well an
organization uses its advantages for produce benefit and incentive to investors (Dürr,
Engelstätter and Ward, 2017).
A higher ratio or worth is regularly evauated by each and every organization as this typically
implies the business is performing great by creating incomes, benefits, and income. The ratios
are most helpful when they are being analyzed by the company against the another company or
when the organizations are compared against the industry standards. The most regularly utilized
gainfulness proportions are analyzed underneath. The major test that is faced by the accountants
is the structure of the data for making the decisions (Auzair & Amir, 2017).
Every one of you will utilize bookkeeping data in your professions. In this way, you have to
think enough about bookkeeping to get the data you requirement for basic leadership.
Accountants face numerous decisions including morals. For instance, chiefs are in charge of
accomplishing budgetary targets, for example, net gain. Administrators who neglect to
accomplish these objectives may lose their positions.

Running Head: MANAGEMENT ACOCUNTING
A half and half costing framework is a cost bookkeeping framework that incorporates highlights
of both a vocation costing and procedure costing framework. A half and half costing framework
is helpful when a generation office handles gatherings of items in clusters and charges the
expense of the raw products to groups while additionally accumulating work and overhead costs
at the departmental or work focus level and distributing these expenses at the individual unit
level (just like the case in a procedure costing condition). In the present case analysis the profit
of the company, in case of delivering the 300 tours and 400 tours has been determined
separately. The costs are bifurcate in terms of cost of accommodation, evening meals and tours
cost. The profit in case of 300 tours is, $3131600 and the topic in case of 400 tours is $4315400
(Mathuva, 2015).
Question 3
Hybrid Approach is a tool that is used to calculate the overall cost of the product. Under the field
of cost accounting system a hybrid costing can be termed as the amalgamation of both the topics
such as job costing as well as the process costing. A crossover costing framework is helpful
when a creation office handles gatherings of items in groups and charges the expense of
materials to those bunches (as for the situation in a vocation costing condition), while likewise
collecting work and overhead costs at the departmental or work focus level and allotting these
expenses at the individual unit level (just like the case in a procedure costing condition). Hybrid
costing is remembered when there the processing is done of the base product and, any reverse
effects or the modifications. The situation is temporary but when the identical products are
services are given to the customer until Snowy mountain reaches the break-even point, the
profitability of the company cannot be assessed (Kitsios, et al 2015).

Running Head: MANAGEMENT ACOCUNTING
Question 4
Meals Cost of the ingredients
Evening
meals Total
Roast 4.2 152000 638400
Spaghetti 3.3 152000 501600
Vegetarian burgers 3.78 152000 574560
Fish fillets 5.4 152000 820800
2535360
Kitchen service Restaurant/ Table service
50000 30000 80000
20000 25000 45000
15000 4000 19000
1100 900 2000
1900 4100 6000
88000 64000 152000
Profit Statement
Number of
backpackers
$
2,400.00
Number of days
$
5.00
Number of meals
$
8,000.00

Running Head: MANAGEMENT ACOCUNTING
Revenue $ 96,000,000.00
Less: Total costs $ 2,535,360.00
Gross profit $ 93,464,640.00
Question 5
The approach the will be taken to undertake the estimation of the tour is to bifurcate the costs in
to the fixed and the variable costs. Fixed costs those cost that are of static nature and cannot be
avoided, on the other hand the variable costs are the costs that are of the variable nature and they
incur according to the number of the tours. The next step that shall be inculcated by the Snowy
Mountains is to figure-out the breakeven point and this is done in order to find out the number of
the tours of the overall business (Iraldo, Testa, Lanzini & Battaglia, 2017). The third step in the
process is to determine the profit earned against the cost borne by the company. The value
addition is to provide the value for the customers and whether the addition is justified by the
actions or not. The major hands of the company are also in the area of research and development
of the company. lastly the demand for the occupancy at the hotel will also be recognized in taken
into action in order to have an advantage. The approach to set the prices will also dependent on
the type of the pricing such as seasonal pricing where the customers charges the high rate and the
overall supply is low or kept unique and unchanged (Cohen, 2016).
Since the weekend days provides more sale to the company due to the availability of the
customers and in this particular scenario the tour operators asks for higher prices during the peak
season. The reverse cases have also been their prevailing in the market. This is maybe the
trickiest technique to actualize. These could be limited offers, as they accomplish for some

Running Head: MANAGEMENT ACOCUNTING
auditorium appears, where clients are just permitted to purchase a ticket a couple of hours before
the show or on the day itself (Lee, 2015).
In the event that your definitive objective is to get your visits booked to limit, this would be a
decent procedure to push for a minute ago deals. Notwithstanding, you have to choose if this
exceeds the potential salary you could have produced using un-limited appointments.
Question 6
By calculating the profit or loss for the tours section it can be observed that the company is
having the profit in case the 300 half day tours are taken by the customers whereas in case of the
400 half day tours. The table below provides the detail of costs as well as the expenditure in
order to have an in-depth understanding of the two major tours. There is 2400 number of
backpackers and the tour cost is bifurcated on the basis of the proportion of the customer s out of
24000. Such that the tours sales is $72000 in case of 300 tours days and the same is of $96000.
Against the sales made by the company the profit associated is $650657 and the same turns out
to be accelerated in case of 400 tours taken amongst the 2400 members (Harwood, Lovett and
Turner, 2015).
1029 1371
Tours $ $
Total Sales 720000 960000
Tour guides 1000 1000
Equipment depreciation 20000 20000
Tour van depreciation 5000 5000
Fuel and van maintenance 10000 10000
Public Liability insurance 15000 15000
Picnic lunches 12343 16457
Other expenses 6000 6000
Total expenses 69343 73457

Running Head: MANAGEMENT ACOCUNTING
Profit 650657 -34829
The profit that has been earned in the section 1 is$650657, whereas the same is more in case of
the 400 tours which is $886543. In terms of the profitability the business is doing and performing
well. Further, the expenses that have been high and that needs to be controlled are picnic lunches
and the insurance of the liability.
Question 7
In order to improve the profitability of the business there are several recommendations which can
be incorporated by the business in order to have a profitable business. Following are the several
strategies that can be used by the business in order to have a deep analysis. The company must
improve the funding of the money or the financial aspect of the company. One of the
recommendations that can be measured by the most of the other products is the ability to settle
down. For example City/local visits ordinarily keep going for one entire day or less. They pursue
a fixed agenda and will visit regions of enthusiasm for a particular spot, regardless of whether
that is notable, religious or social, refreshments or dinners are frequently included.
Gathering visits likewise pursue a fixed and pre-orchestrated agenda. They frequently just occur
contingent upon the quantity of explorers for example they require a specific number of voyagers
so as to proceed or it turns into a money related expense instead of gainful (Cohen, 2016).
Question 8
There are several strategic variables or say the parameters that are helpful for the companies like
tours and the travel companies. Further the analysis is carried out on the basis of the fact that this

Running Head: MANAGEMENT ACOCUNTING
company helps in covering most of the area of the business. Right from food, to accommodation
to the cost of the tours the strategic initiative shall be taken by the company to improve the
existing performance of the business.
Recommendations
The five major strategic concerns and the same have been analyzed in detail in order to have any
idea of the loss making activity if any. For the purpose of the effective utilization, the digital
mediums can be used to promote the events and the activities taking place in the hotel. In order
to lure the customers the basic idea exists is the promoting the discounted schemes will work
properly (Lee, 2015). In this manner the customers will get attracted a lot to the Snowy
Mountains as they would provide the facilities at the limited costs.
Conclusion
From the overall analysis it can be concluded that the Snowy Mountains is giving the facility of
the backpackers and the profitable business is being carried out. Further, the job costing process
was used to decide the correct bifurcation of the costs. The overall strategic decisions are taken
by the company to deliver the best kind of the services to the back packers.

Running Head: MANAGEMENT ACOCUNTING
References
Auzair, S. M., & Amir, A. M. (2017). Strategic priorities of Malaysian hotels: The role of
management control bureaucracy. Asian Journal of Accounting and Governance, 8, 1-12.
Cohen, E. H. (2016). Self-assessing the benefits of educational tours. Journal of Travel
Research, 55(3), 353-361.
Dürr, N., Engelstätter, B. and Ward, M.R., 2017. Strategic microscheduling of movies.
Giannetti, R., Magnacca, F. and Mariani, G., 2018. Academic-based new product development
reserach project and management accounitng practice: a pragmatic constructivist
approach. Proceedings of Pragmatic Constructivism, 8(1), pp.28-29.
Harwood, A.R., Lovett, A.A. and Turner, J.A., 2015. Customising virtual globe tours to enhance
community awareness of local landscape benefits. Landscape and Urban Planning, 142, pp.106-
119.
Iraldo, F., Testa, F., Lanzini, P., & Battaglia, M. (2017). Greening competitiveness for hotels and
restaurants. Journal of Small Business and Enterprise Development, 24(3), 607-628.
Kitsios, F., Grigoroudis, E., Giannikopoulos, K., Doumpos, M. and Zopounidis, C., 2015.
Strategic decision making using multicriteria analysis: new service development in Greek
hotels. International journal of data analysis techniques and strategies, 7(2), pp.187-202.
Lee, S. K. (2015). Quality differentiation and conditional spatial price competition among
hotels. Tourism Management, 46, 114-122.

Running Head: MANAGEMENT ACOCUNTING
Mathuva, D., 2015. The Influence of working capital management components on corporate
profitability.