THE RELEVANCE OF COST ACCOUNTING FOR THE HOSPITALITY INDUSTRY
In
the contemporary period the tourism and hospitality industry has experienced
dynamic growth despite the challenges facing not only the global crisis, but
also market changes, consumer behavior and technological trends. Accounting,
the language of business is required to keep up with changes made to each
particular area of activity so that they can provide timely relevant
information to be managed by an efficient information system. Our article
focuses on presenting the importance of management accounting and cost
information system in the hospitality industry, then consider identifying
features of this sector and their impact on accounting. The methodology of our
research falls within the economic research, being theoretical, aiming
primarily to knowledge objectives and the relevance of management accounting
for economic entities, and then we have the characteristics of hospitality
industry and possible organizational management accounting in this sector. In
our perspective cost calculation for services, packages or travel benefits must
take into account the development of the accounts Tourism is an economic and
social phenomenon of modern civilization, very anchored in society and
therefore strongly influenced by its development, it is also a factor in individual
and social equilibrium, a source of fulfillment of own pleasures, which must
develop in harmony with the human, natural and cultural environment and to
enroll in a context of sustainable development64. From the importance of
tourism, from the perspectives of evolution of this sector but taking into
account the current situation for national economies hit by the global economic
crisis, the maintenance and development of an entity from the hospitality
industry involves the harmonization of the market opportunities with their own
resources and skills, funding strategies based on cost information
complementary tourism products and services based on financial and accounting
information, but considering and balancing the company's capacity to
environmental conditions. Costing and management accounting in the hospitality
industry is a challenge for managers in this sector entities, but it also is,
in our opinion, a promoter of success and a market strength. Romanian
literature is rather poor in the treatment of these issues, but more generous
is the international literature on studies of this topic. Thus, in a context of
economic difficulties and the loss in results it is very important for
accounting researchers to address the issue of cost calculation and more
responsibility in the hospitality industry, making a motivational approach in
understanding the benefits that the implementation of an cost information
system produces. Therefore the question arises, wich costing methods are best
suited for the hospitality industry? If there are more options which is the
best solution? Who provides the most important information? Then the great task
of the specialists to aware the management team of the hospitality industry of
the importance of implementation an information system cost calculation. Our
opinion is that only with businesses enviroment from the hospitality industry
we can answer many questions that arise when exploring this arid area.
Chartered Institute of Management Accounting specifies activities that involve
management accounting as: • "Participation in planning at a strategic and
operational level, involving the establishment of policies and formulation of
budgets; • Analysis, presentation and interpretation of relevant information to
guide management decisions; • Contributes to control and performance analysis
by providing reports and comparisons with the budget, analysis and
interpretation of deviations. A possible organization of management accounting
in the hospitality industry No matter the definition of management accounting,
a detailed view of the work done in any field of activity is impossible without
the existence of an economic information system. "Good economic management
information requires the development of an information system with multiple
interfaces, oriented towards both inside and outside entity to management
information that will help create information flows that have a high level of
quality and whose purpose is to attract competitive advantages in the fight
with ascendancy of needed informations manifested in contemporary society
"74and to be able to achieve the objectives it is vital and indispensable
the existancy of a cost information system. The information system is a cost
accounting information system through which are determined the costs of
manufactured products, works and services provided and contribute as well to
record these costs in the accounts. The evolution to a new economy - the
knowledge based economy - gives new dimensions and roles of information and
information system. The information revolution taking place with a special
intensity makes impact on the functionality and performance information system
entity to increase. In our vision the building of an cost information system in
the hospitality industry starts with data collection of economic, social and
cost accounting information which will then be subject of a manual processing
or through a computer system, an important factor in this phase being the human
one, then there will be taken into account also the external sources. This is
how the database of cost information system in the hospitality industry will be
made. Given the objectives and purposes of cost information system we can say
that the economic entity that is based on the following three subsystems: the
informational subsystem of cost organisation , the informational subsystem of
cost calculation, the informational subsystem of control information and cost
analysis (controlling). The entire cost information system will provide
information to the management team, which will implement one of these methods
of management: management through costs and management through objectives, or a
combination of the two. Schematic cost information system of an entity in the
hospitality industry can be prese nted as follows:
The
second subsystem of cost information can use the accounts from class 9 to
provide information about the cost of services, packages and tourist services,
but they must be tailored to the specific activity and the method adopted by
the economic entity, or they may develop analytic accounts of expenditure and
income. We believe that one of the methods appropriate for cost calculation in
the hospitality industry is Direct Costing and Cost Volume Profit Analysis.
-Account 901 Domestic settlement of expenditure,
account that will ensure the taking over of the incorporable costs expenditures
from the financial acctounting ;
-Acount 902 Internal settlements regarding the
effected tourism We consider beneficial the open of analytic accounts of this
synthetic account for tourism packages on domestic and international tourism,
treatment tickets, outpatient treatment, etc., action wich will facilitate the
determination of any "differences" that can occur between the default
cost and the actual cost of travel benefit; -
Account
903 Internal settlement regarding the price differences, the same detailed
analytical accounts as the account 902. We consider appropriate to mention,
that due to the features of the hospitality industry, existing amounts in
account 903 shall have the meaning of income and not as differences; -
Account
921 Basic business travel expenses, with development of similar analytical
accounts like 902 and 903. Given the fact that the proposed new method in order
to determine costs in the hospitality industry is Direct Costing, we need to
make some comments. Direct Costing method is based on the principle of
separation costs incurred in an economic entity, depending on their behavior in
relation to the physical volume of production, variable costs and fixed costs
constant or conventional. We do support this separation, although we recognize
that certain expenses are not completely variable or fixed altogether. We might
call them trimmers and semifixe expenses, but I opted for the name of mixed costs.
Examples are many on these expenses, but we’ll develop one that summarize the
costs of postal services and telecommunications. Any economic entity in the
hospitality industry records these type of expense as fixed costs, but given
the potential tourists to call various national or international phone numbers
from the phone in the room, these calls will generate additional costs. The
same behavior "semi" have expenses of maintenance and cleaning
materials, energy costs and examples could continue. To cope with fierce
competition existing on the market of this sector plus the strong influence of
the global crisis is mainly important to be given a greater importance to
internal and external information activities aimed at economic entity, and
these data to be summarized and presented using one management team performance
measurement tools namely dashboard. The dashboard is essential to the running
of the economic entity, providing synthesis absolutely necessary to know and
analyze activities more complete and also identifying activities such
deviations' loss achievements .We believe that hospitality dashboard will not
achieve its objectives if it’s gonna present only this financial information,
but be prepared as a dashboard that provides extra financial information to the
management team in terms of customers, employees, suppliers and not least all
of the before mentioned from the perspective of shareholders. An important role
in performance measurement process in the hospitality industry have employees,
therefore it id needed to for me primarily an organizational culture, which is
considered "primary vehicle" for the successful implementation of
performance measurement tools, whether it’s dashboard or Balanced Scorecard.
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