ACCT3104 Management Accounting - Free Samples to Students

The purpose of this case is to illustrate variance analysis in a service industry setting. You should aim to integrate learnings in ACCT3104 up to and including Topic 8. For example, teams’ ability to add insight and depth to their variance analyses requires application of knowledge beyond mere calculations, as reflected in the marking rubric.

You are given marketing data, a budgeted income statement, actual income statement, employee data and the underlying monthly budget prepared by the general manager. You use a monthly budget to assess the cost behaviour of each of the 50-plus line items, creating a series of variance analyses that enable you to assess the performance of the hotel. Data on employee wages and hours worked enable you to “drill down” to compute variances for hotel labour. Another unique aspect of the case is the availability of market data from a third-party, industry benchmarking firm that allows you to compute and further explore sales volume variances (i.e., sales variance analysis and market variance analyses).

It is envisaged that teams will undertake their own independent research of the hotel industry. For example, by consulting various sources such as journal articles and industry related publications etc. to develop their understanding of the contextual environment (i.e., hotels). This should further assist teams to provide depth and meaningful interpretation of results obtained from their analyses.

Qualitative analysis:

The case explains that the qualitative factors of the company , it has been measured that the performance of the company is quite impressive, company has managed to meet the expected figures of the company and it expresses that the position of Lone star is quite better in the industry. However, further, the study has been done on the qualitative factors of the business to measure that whether the company has met the other factors in order to improve the overall performance of the business.

Firstly, the market share and the occupancy rate of the hotel have been measured and it has been found that the company was expecting to rent 27,376 rooms in the current year whereas the actual room rented by the business are 25,435. The reduction has taken plac

After identifying the changes into the marketing strategies and its impact on the market share and the performance of the business, the internal factors have been studied which has affected the performance of the business. The study has been done on the human resource department of the business to identify that whether the policies of the company are enough competitive and attractive to retain the existing employees and attract more employees (Barnes, 2007).

The human resources analysis on lone star explains that the company has enough staff to manage the operations and activities of the business in right manner and run the business in an efficient way. The main focus of the HR department of the hotel is to focus on the needs of the employees and allocate the right person at right place to improve the effectiveness. Even though it has been found that the employee turnover rate of the business is quite higher because of the various issues in the HR policies of the business (Koropp, Kellermanns, Grichnik & Stanley, 2014).). Such as, the extra incentives and benefits are not offered by the company to its employees and the leave policies of the company are also not attractive which demotivated the employees of the comapny and improves the turnover.

The company could make the changes into the HR policies, leave policies and incentive policies in order to reduce the employee turnover in the business and maintain the better performance of the business.

Further, the study has been done on the various other factors of the business which has affected the operations, activities and other factors of the business. On the basis of the case, it has been found that the company has improved the prices of the rooms which as distracted the guest and the occupancy rate of the business has been lower from the last year and in context with the competitors of the business (Chandra, 2011). The changes into the prices have been done by the business without making any changes into the services which has lead to the guest towards de-motivational level and it is one of the factors which must be focused by the business to improve the qualitative and quantitative performance of the business.

In addition, the study has been done on the foreign tourist and the other guest of the hotel which are not local. The study explains that the number of overseas customers has been reduced in the market in the current year which is an economical factors and it has affected the overall sales and the performance of the business. Due to the decrement in the overseas sales, the revenue and profit level has been hampered. However, the company could not make control on it (Banes, 2007). The company could make new strategies to attract the local customers so that the revenue level could be managed by the business and the performance of the business could be improved at the market place.

The associated cost of the business has also been measured and it has been found that the total expenses of the business have been affected in the current year. According to the expected figures of the business, the expenses of the company have been lowered but in actual scenario, the level of expenses in the business has been improved and affected the profitability position of the business (Dema-Moreno, 2009). The evaluation on the case expresses that the level of the expenses of the business has been improved because of the higher research and methodology expenses of the business which could be controlled by the business on its hand to reduce the affect of the expenses on the total profitability level of the business.

The corporate culture of the business has also been studied and it has been measured that the culture of the Lone hotel is quite complex which makes the internal and external stakeholders of the business bit confuse, the changes into the corporate culture and policies could be done by the business in order to maintain and manage the overall position and performance of the business. The study has also been done on the affected part of business because of the cultural issues and it has been found that most affected department of the business is human resource department. The changes are required to be done by the business to improve the overall level of the business.

The study has explained that the market share, performance, policies, human resources level, employee motivation etc factors of the business are reducing at great level which must be managed and controlled by the business in order to manage and maintain the overall performance of the business. The changes into the marketing budget and strategies would improve the overall revenue and profitability position; further, the changes into the corporate culture, policies in the human resource etc would reduce the level of the human and employee turnover in the business (Brigham & Houston, 2012).

In addition, the other changes in the business such as changes into the price control on the expenses of the business, changes into the policies and strategies of the business to improve the sales of the business and maintain at better level. The overall analysis expresses that the performance could be improved in the business along with the few changes into the overall performance.

References:

Barnes, P. (2007), The Analysis and Use of Financial Ratios: A Review Article, Journal of Business Finance & Accounting, 14 (4), p. 449-461

Brigham, E. F., & Houston, J. F. (2012). Fundamentals of financial management. Cengage Learning.

Chandra, P. (2011). Financial management. Tata McGraw-Hill Education.

Dema-Moreno, S. (2009). Behind the negotiations: Financial decision-making processes in Spanish dual-income couples. Feminist Economics, 15(1), 27-56.

Koropp, C., Kellermanns, F. W., Grichnik, D., & Stanley, L. (2014). Financial decision making in family firms: An adaptation of the theory of planned behavior. Family Business Review, 27(4), 307-327.

Mandell, L., & Hanson, K. O. (2009, January). The impact of financial education in high school and college on financial literacy and subsequent financial decision making. In American Economic Association Meetings (Vol. 4, p. 2009).