2. Use of Management Accounting Information as Decision Making Instrument in Travel and Tourism.
1. Importance of Costs and Volume in Financial Management of Travel and Tourism Business
The organization Merlin Entertainments Plc is considered as one of the most renowned companies which are operated across 23 countries in around 110 attractions. The aim and objective of preparing this report is to assist the evaluation of the significance of the volume and costs that impart on to the practices of the financial management of the organization Merlin Entertainments Plc. It can be said that the Cost-Volume-Profit Analysis is the instrument which is mostly used by the particular organization as the important technique for the managers of the firm (Thompson 2012). The Cost-Volume-Profit analysis is also known as CVP analysis in short that helps in assisting and assuming the continuous selling price per unit comprehensive of the variable costs each unit. The importance of the costs and volume in the financial management of travel and tourism business can be summarized as below:
Firstly, when the managers of the organization Merlin Entertainments Plc carry out the CVP analysis within the firm, they can understand the various levels of sales that might develop a specific amount of profit for the particular firm.
Secondly, the CVP analysis helps in assisting the financial managers of the particular organization Merlin Entertainments Plc in order to add the pre-decided income along with the fixed costs that are related to the tourism and travelling operations that are inclined with the real production amount. Thus, this helps the managers of the firm in assisting the yield from the contribution-margin ratio.
Thirdly, the CVP analysis helps the financial managers in detecting the actual expenses. The total amount of sales volume and the costs of the firm makes yearly in order to increase the profitability ratio of the particular firm. In addition to this, the CVP analysis helps the managers of the firm Merlin Entertainments Plc to expect the needed changes in the production cost that might affect the structure of profitability of the particular organization.
Fourthly, the CVP analysis is depiction of the cost structure of the operation and travelling departments. In addition to this, the capacity of production of the management is also depicted by implementing CVP analysis (Shiller 2012). Therefore, it can be said that the CVP analysis helps the financial managers of the organization Merlin Entertainments Plc in assisting and also in taking accurate financial decisions. Additionally, this guides the managers to concentrate on the variable costs of the particular organization.
Lastly, it can also be said that the CVP analysis allows the financial managers of the particular organization to take proper decisions regarding the breakeven point of the firm (Northington 2011). Thus, this analysis will assist the financial managers of the organization to evaluate the procedures where the investment and spending of the organization might contribute in order to make the operations of the organization Merlin Entertainments Plc successful.
Therefore, from the above analysis and discussion, it can be said that the volume and the costs of production are the key parameters that yield up to CVP analysis in the particular organization Merlin Entertainments Plc.
2. Use of Management Accounting Information as Decision Making Instrument in Travel and Tourism
The efficiency within the business is maintained and thus the particular firm Merlin Entertainments Plc has to be sufficient enough for the procedures such that higher returns can be earned in the long run. Therefore, in order to obtain all these, the mentioned firm has measured the following situations:
Planning: The particular firm has intended to maintain efficient activities by serving amusements to each personnel who visits the resorts (Kensinger 2011). Proper artificial amusements along with multifarious facilities will be provided and applied in order to increase the inhabitants’ craze by implementing proper policies of marketing.
Controlling: The total control regarding the planned activities has been regulated through special efficacy. This efficacy among the operators of the firm is handled in order to avoid any discrepancies among the tourists (Hillier 2013).
Decision-making: In order to obtain more returns, the management officials have decided to give cent percent satisfaction to the tourists about the feelings of rejoice and amusement among the tourists.
Forecasting: It is an important factor as accurate forecasting helps in regulating the operations of the business. This will help in achieving higher returns. The increased rate of returns will be without any discrepancies in the process of handling the stability of the financial condition of the firm in a particular financial year (Clift 2011). This will also help in reducing the implication of damage and financial loss of the business.
Pricing: The management officials of the organization Merlin Entertainments Plc decided to implement proper pricing strategies in order to attract the tourists repeatedly. The proper pricing helps the travelers to enjoy the amusement products. This will enrich the customer satisfaction as well as the brand value of the organization that will increase the total revenue of the organization.
The management accounting procedure is composed of certain instruments which are regulated in order to make proper decision for the organization Merlin Entertainments Plc for the objective of tourism and travel. Therefore, the accounting information is essentially required to uphold the situation to maintain the effectiveness of the management of the organization (Clark and Baker 2011).
In vital arranging the administration bookkeeping plays an important role. At the moment when the organization intends to settle an essential choice, the organization achieves another venture in various countries. In addition to this, various tools can also be utilized for choice making. These implement proportion examination, conjectures and spending plans. The suitable ways of measuring decision making skills and the instruments by which the proportion is assessed is one of the variables that are measured like others (Berk and DeMarzo 2011). The administration bookkeepers use the proportions along with other business information and the data are accessed openly in order to perform the survey of various parts of the organization Merlin Entertainments Plc.
The essential proportions that are utilized as a part of administration bookkeeping include the following:
Efficiency proportions: It helps in understanding how well the particular organization is running.
Action proportions or proficiency proportions: this helps in understanding whether the organization Merlin Entertainments Plc can pay its compulsion or not.
Therefore, it can be said that the administration bookkeepers should possess the capacity of creating right conjectures, accurate examination and discontinued and expert review to Merlin Entertainments Plc as these get added to the achievement of the business in the future.
Berk, J. and DeMarzo, P. (2011). Corporate finance. Boston, MA: Prentice Hall.
Clark, R. and Baker, D. (2011). Finance. Oxford: Oxford University Press.
Clift, J. (2011). Finance and development. Washington, D.C.: International Monetary Fund.
Hillier, D. (2013). Corporate finance. London [u.a.]: McGraw-Hill.
Kensinger, J. (2011). Research in finance. Bingley, U.K.: Emerald.
Northington, S. (2011). Finance. New York, NY: Ferguson's.
Shiller, R. (2012). Finance and the good society. Princeton, N.J.: Princeton University Press.
Thompson, T. (2012). Benchmarking the finance function 2012. Morrisotwn, NJ: Financial Executives Research Foundation.