Your business has been open for a month, and you have prepared an income statement and completed a variance analysis on the data. Now you will meet with investors and a few other internal stakeholders to share your company’s progress over the past month and how it has performed with respect to your cost and budget projections. The investors would like to see the thought process behind your financial strategy and how your company has performed in its first month. They have therefore asked you to present a report that includes the costing and income data from your Project Workbook.
Submit a detailed report to your potential investors and other stakeholders to explain and defend your costing strategies and to share your business’s performance to date. Your report can be in the form of a PowerPoint presentation or a Word document. In either format, be sure to effectively communicate with your stakeholders by breaking down concepts and using investor-friendly language to build their trust and confidence.
The goal of this report is to look over how managerial accounting may be used in the hospitality sector to manage the resources that it spends. Managerial accounting enables managers to make better business decisions based on qualitative data. The hospitality management information system simplifies processes and activities so that day-to-day operations and long-term planning may be accomplished.
Overview of the Company
The resort Forever Tasty Group features an on-site club, grill, poolside beverage service, and a continental breakfast bar. It’s the foundation of a highly lucrative hotel business that focuses on delivering high-quality hotel services at a low cost.
To demonstrate how management accounting serves as a control function in the Forever Tasty Group by displaying performance as well as control reports that highlight differences between expected and actual results. This study serves as a foundation for correcting problems in the hospitality industry’s control operations.
Methods and Approach
Managerial accounting will use several approaches such as inventory value as well as product costing, capital budgeting, and marginal analysis to help the hotel business achieve its objectives. The capital budgeting technique will allow for the examination of necessary capital expenditure decisions. When making new capital budgeting decisions, the net present value (NPV) or internal rate of return (IRR) are calculated.
The break-even study will be done by Forever Tasty Group, with a monthly break-even point of around $50000. The average percentage variable cost is set at 11percent, while the expected monthly fixed expenditures are $45000.
This job orders costing system will enable Forever Tasty Group and make accurate estimations of the monetary values of goods, labor, and overheads used to complete the project. The Forever Tasty Team will be using service costing, which is a means of providing services to a hotel.
The analysis will be focused on Fun Meals served at parties or events such as business conferences and music festivals. The expected cost and revenue structure are as follows:
Products Prices ($)
Sandwiches’ retail pricing 6.00
Sandwiches’ average cost 2.00
Food and accommodation 400.00
Gas Costs for Cooking 180.00
Services one 420.00
The donation of every sandwich will be calculated as $6-$2 = $4.
The process will have a fixed cost of ($400 + $180 + $420) = $1000.
$2 is the contribution margin.
The eventual break-even point is determined by the number of the units sold, with no profits and losses. It entails dividing the fixed cost by the contribution margin ($1000 / $ 2) to arrive at a total of $500. To break even, the hotel must sell five hundred units in two days, but it must do more to make a profit.
Financial Statements: Using the information in the Milestone Two Market Research Data Appendix, assess your financial performance to date.
Statement of Cost of Goods Sold: Share the statement of cost of goods sold and logically interpret the business’s performance against the provided benchmarks.
Income Statement: Share the income statement and logically interpret the business’s performance against the provided benchmarks.
Variances: Illustrate all variances for the direct labor time and the materials price.
Significance of Variances: Evaluate the significance of the variances in terms of the potential to impact future budgeting decisions and planning.
T. Alvarez, L. Sensini, C. Bello, and M. Vazquez (2021). Evidence from a developing economy on management accounting practices & performance of SMEs in the hospitality industry. 24-35 in International Journal of the Business & Social Science.
M. J. Turner, S. A. Way, D. Hodari, and W. Witteman (2017). The importance of the strategic management accounting in hotel property performance. 63, 33-43 in International Journal of Hotel Management.
H. M. El-Shishini, H. M. El-Shishini, H. M. El-Sh (2017). Bahraini hotels employ management accounting techniques. 6(2), 78, Review of the Integrative Business & Economics Research.