Management Accounting Assignment

Management Accounting Assignment

Introduction

The assignment will take into consideration London Athenaeum which is a modern style of hotel. The hotel is in the form of a boutique that offers not only the facilities for the people to stay their but can also enjoy the café and restaurant in the hotel. The hotel is located in the West of London which has gone through a phase of renovation. The owner's strategy behind the renovation was that as everything in this world is going through a phase of change the owners of either any business organisation, hotel, restaurant or any other business should adopt the changes in the world. So that the customers can feel that everything is moving along with the world. The owners wanted to bring change in their style of business therefore in order to entertain the young businessmen from all over the world, they introduced café and restaurant so that they can enjoy while spending their time in the hotel. Another reason of the owner was to provide its customers all the facilities under one roof so that they do not have to go out of the hotel. The management accounting will enable the owner to find out the results according to their standards set and if there are some variances then it can find out the reason of the variance and will try to reduce that in the years to come. It also will enable to find out which strategies worked out and which strategies need to be changed.

Discussion

Organisations all over the world use budgeting techniques in order to predict or make an estimation of how much the owners have resources that can be used in the operations of the business and after analysing the input the owners predict the revenues, profits or loss that will occur in the future. There are several kinds of budgets prepared by the accountants in order to keep an estimation of cost and revenue associated with each activity of the business. The different kinds of budgets prepared organisations are sales, purchase, labour, material, operation and other many different kinds of budgets. Budgets are a very important tool as they enable each department and the overall organisation a direction that need to be followed in order to achieve a target, more than the target is better but not less than the target. It keeps the whole organisation united and everyone tries to accomplish one goal. There are also two kinds of budgets prepared by manufacturing organisations; one the static budget and the other one is the flexible budget. The static budget is also called the master budget which is developed by taking into consideration the planned level of output at the beginning of an accounting period. This budget is called static budget because it is only made for the standard output set or planned for a fiscal year. The only difference between the static budget and the flexible budget is that static budget is made for a set or planned output in ...