Management Accounting Information for Travel and Tourism Businesses

This report explores the application of management accounting information within travel and tourism businesses, focusing on its role in effective decision-making. It examines various management accounting tools, including break-even analysis, budgeting, and variance analysis, detailing how these tools aid in financial performance measurement and identification of areas for improvement. The report further discusses the use of management accounting information for decision-making, trend comparison, forecasting, raising capital, and meeting budgetary objectives within the travel and tourism sector. Additionally, it highlights the importance of cost-volume-profit (CVP) analysis in profit planning, decision-making, price determination, budget preparation, and cost control, providing a comprehensive overview of how management accounting contributes to the financial success of travel and tourism businesses. Desklib offers a wealth of resources, including past papers and solved assignments, to support students in their understanding of these concepts.

Finance and Funding in
Travel and Tourism

2.1 Management accounting information used in travel
and tourism businesses
Introduction
• Management accounting is the tool which is being used by the venture to make the
effective decision of the business. There are several techniques that are included in
the management accounting which can helps the venture to measure their financial
performance.
• With the information collected with the help of management accounting, firm can
find their week spots. This will help them to take the corrective action in order to
reduce the week spots.

Types of management accounting informations
Different type of management accounting tools are as follows:
• Break even analysis
• Budgets
• Variance analysis:

Break even analysis:
• It is very significant tool which is being used by the venture in order to make the
effective decision.
• With the help of this tool, firm can able to analyse the sale target of the employees
and how much profit they are going to achieve in the coming time (Pantano and Di
Pietro, 2013).
• Firm first identify that how much variable expenses is being paid from the sale
revenue and then finds that what amount of sales needs to be made to cover entire
cost in the business.

Budgets
• It is the different type of statement which is being made by the organisation
• It consists of cash inflow and outflow of the organisation in order to find their
income and expenditure (Gössling, 2015)
• This is tool which helps the organisation to plan their expenditure in such a way
they can earn high rate of interest on their investment.
• This method helps the venture to have proper control over their expenditure so that
they can earn high profit from their customers.

Variance analysis:
• It is also one of the important method of the management accounting which serve
effective information in order to make the effective decision of the organisation
• This method helps the firm to find the positive and negative performance of the
organisation by comparing the budgeted value with the actual value (Kastenholz
and Carneiro, 2013).

2.2 Use of management accounting information as a
decision-making tool
Management information system, budget, financial system are the significant management
accounting information tool. This will help them to use the different techniques in the several
aspects, that are as follows:
• Decision making
• Comparison with trends
• Forecasting
• Raising capital
• Meeting budget and objectives

Decision making
• Management accounting information includes several accounts
such as balance sheet, profit and loss account etc.
• With the help of these accounts, firm can easily estimate the
difference between the actual and estimated sales.
• This will help the Dalata Hotel Group plc to make the effective
decision which helps them to implement the different strategies in
order to enhance their sales (Dhiman and Kumar, 2015).

Comparison with trends:
• Management accounting information collect all the financial information about the
organisation of different years.
• When the firm compare the information of past year with the current year, they can
find that weather they are succeeding or not.
• With the help of comparison, firm can implement the different trends which helps
them attract and retain large number of customers

Forecasting
• It is being known that comparison of present with past helps the venture to estimate
future.
• With the help of management information system, firm can find the areas where
they are lacking behind.
• In such circumstances, this will help them to implement the different strategies by
which they can reduce the gaps.

Raising capital
• This is the another aspect at which management accounting information is being
implemented and used.
• This helps the venture to find the different sources from where the firm can raise
the fund and need top pay low interest.
• As in off season company can offer discounts by this way cash inflow will get
higher

Meeting budget and objectives
• Implementing of these techniques of the management accounting information, firm
can able to achieve their objectives.
• Key aim of the organisation is to enhance sales and increase profit.
• By collecting and analysing this information, organisation can attain this objective
(Sun and Kim, 2013).