Final Paper on Managerial Accounting

On this sm entirely p gage of land in the middle of a bustling urban center called Bacolod, in the Negros Occidental province of the Philippines, lies home to the family of Jose and Teodula Tamera. Located on 79 Lacson Street, this place was especially home to one of their sons, Robin Tamera.After years of decadence in this little spot called home, Robin found himself working in Ontario, Canada. It was there that the inspiration to keep the propertys memories alive was sparked. He had a desire to keep this lot not only as a memorial keepsake for himself, siblings, and relatives, but first and foremost as a reminder of his pargonnts love and care.Robin Tameras concept was to well-defined a very humble place for all to stay in Bacolod City, whether they were local or foreign visitors. He wanted a hotel that incorporated and fitting all of the finest amenities that other places in the world could offer.In 2006, after years of investment and construction, Robins desire became a realit y after converting their property to a manage and breakfast place. The Tamera kernel Inn became not only a place to stay, but a memorial and tribute to the Tamera Family. The Inn offers overnight lodging and meals. It includes 1 Superior room, 8 De Luxe rooms , 6 standard double rooms, 5 standard single rooms, a function room, all air-conditioned with business TV services. The Tamera Plaza Inn has 30 full cartridge clip employees to date.Mean fourth dimension, the order faces very serious seasonal customer fluctuations. The average hail of tourists in Bacolod is 70,000 per year, absolute majority of which are during Summer and in October during the MassKara festival. The student lodging has some 2 % of these tourist choose them for accomodations. Although the place has no rental be and the expenses in the contsruction of the order has already been acquired, the inn has an opport unity to increase its profitiability.Below is the the woo allocation per yearFor the purpose of this paper, Activity-Based Costing will be habitd to analyze the inns profitability and to present a recommendation. In evade 1, Activities Analysis and Assignment of Activities to Products (lodging and dining) by activity drivers. Labor, material and utility personify traitd to activities are shown in columns (1)-(3) of table 2. Columns (4)-(11) present detail about how activities are allotted to from each one crossway by drivers. For example, the driver of the alter activity is the true cleaning time which is total 3061.6 hours. Using the driver to trace the cleaning activity to the two wares separately, and assigning 2651.4 hours and 410.2 hours respectively, of cleaning time, the driver bay window allocate PHP 46,611 to lodging and PHP 7,212 to dining.Finally, adding all the allocation activities costs in each product we can get the total activity costs. The total product cost is the combination of the total activities costs, lineal material costs, and outsource cos ts (laundry and transportation) in each product. Unit product cost is defined as the total product cost divided by the total number of customers. The unit product costs of lodging and dining are PHP 340.67 and 71.31 per customer respectively for a year. The lodging and dining products of The Tamera Plaza Inn represent two market segments.After applying ABC to the The Tamera Plaza Inn look, the unit costs of each of the Inns products in two market segments are clear. The cost information acquired from ABC in this case will be useful to the owners for marketing strategy, purpose making and cost-volume-profit analysis.Table 1.In the second stage, all activities costs in the five activities centers are assigned to the three country inns products. Table 2 shows activities analysis and the assignment of activities to products by activity drivers. Labor, material and utility costs traced to activities are shown in the second to fourth column of table1 while fifth to tenth columns present detail about how activities are allotted to each product by drivers. For example, the driver of the cleaning activity is the cleaning time which is total 6810.6 hours. Using the driver to trace the cleaning activity to the three products separately, and assigning 2651.4 hours, 3749 hours and 410.2 hours respectively, of cleaning time, the driver can allocate NT$ 46,611 to lodging, NT$65,904 to hot mould use, and NT$7,212 to dining.Finally, adding all the allocation activities costs in each product we can get the total activity costs. The total product cost is the combination of the total activities costs, direct material costs, and outsource costs (laundry, hot spring water) in each product. Unit product cost is defined as the total product cost divided by the total number of customers. The unit product costs of lodging, hot spring use and dining are NT$ 306.21, NT$31.64 and NT$ 67.28 per customer respectively in the busy winter seasons. The lodging, hot spring use and dining prod ucts of this country inn represent three market segments. After applying ABC to the country inn case, the unit costs of each of the country inns products in three market segments are clear. The cost information acquired from ABC in this case is extremely useful to the inns owners (managers) for marketing, decision making and cost-volume-profit analysis.Table 1 Monthly Costs of ResourcesResource life time Replacement value Capital costs Cost per monthRent-a-land 30 700,000 Owners lands 30 150,000,000 13,324,092 1,110,341 Buildings 30 16,050,000 1,425,672 118,806 soulfulnessnel Number Total Costs Cost per monthFull time staffs 23 9,060,000 755,000 Part-time staffs 13 2,448,000 204,000 Managers 2 1,320,000 110,000is the general manager. Meanwhile, the inn faces very serious seasonal customer fluctuations. The average volume of customers for hot spring usecan come to a supreme of 58,048 persons monthly in the winter season and a reaches minimum of 18,311 persons in the summer season. In addition, this hot spring country inn bears a argillaceous space and land costs due to the high cost of buildings and land in Taipei. The monthly costs of rent, lands, buildings and labor are showed in table 1.This inn doesnt use any activity-based costing method in its report system except for the traditional one. Since activity-based costing can be very interlinking and time consuming, and even less in tourism industry, it is not widely applied in the manufacturing industries in Taiwan (Chen, 2001, p. 52). It is recognized that partial activity-based costing can be used to enhance rather than totally replace the accounting system when the company finds it too difficult to implement full-scale ABC-based accounting.Some companies also kvetch that the cost of ABCs administrative and technical complexity, and of continuously generating activity data, exceeds any benefits subsequently derived from it, so that they reject proposals to implement ABC to their companies. Neverthele ss, many firms until now find they have success in cost reduction, product pricing, customer profitability analysis and output decisions when they adopt ABC (Chenhall and Langfield-Smith, 1998 Clarke et al., 1999 Innes and Sinclair, 2000 Cotton et al., 2003).Our traditional accounting cost information was gathered from 1 November, 2003 to 30 December, 2003. The figures for customers volume were acquired from the mean of the number of customers in these two months. In order to obtain a to a greater extent accurate picture of Table 2Activities Analysis and Assigning Activity to Product Using Activity Drivers Resource Labor Materiall Total Quantities of Drivers Total Unit cost per Product cost Activity& Utility Cost Lodging Spring Dining quantity activity driver Lodging Hot-Spring Dining Cleaning 99,572 20,155 119,727 2,651.4 3,749 410.2 6810.6 17.58/hr 46,611 65,904 7,212(10.57%) (3.67%) (0.32%) Changing 1,455 607 2,062 960 0 0 960 2.15/hr 2,062 0 0 sheets(0.47%) (0%) (0%) Washing 32 ,225 22,196 54,421 830 1,832 188.6 2,851 19.09/hr 15,849 34,972 3,600(3.59%) (1.95%) (0.16%) Clear up 91,475 21,623 113,098 0 0 10,710 10,710 10.56/number 0 0 113,098(0%) (0%) (5.06%) witness on 5,454 2,276 7,730 450 0 0 450 17.17/number 7,730 0 0(1.75%) (0%) (0%) Ordering 54,451 1,994 56,445 0 0 11,203 11,203 5.04/number 0 0 56,445(0%) (0%) (2.52%) Carrying 75,220 2,754 77,974 0 0 103,754 103,754 0.75/number 0 0 77,974(0%) (0%) (3.49%) Re-supply 4,320 2,437 6,757 20 436 4 460 14.69/hr 294 6,404 59(0.07%) (0.35%) (0.00%) Cooking 297,968 58,945 356,913 0 0 2,010 2,010 177.57/hr 0 0 356,913(0%) (0%) (15.96%) Purchasing 73,886 605 74,491 18.5 24 198 240.5 309.73/hr 5,730 7,434 61,327(1.30%) (0.41%) (2.74%) Check in 263,806 90,647 354,453 232.47 1,891.67 692.5 2,816.64 125.84/hr 29,255 238,051 87,147 /out(6.64%) (13.26%) (3.90%) Admini- 36,608 1,049 37,657 210 779.2 102 1,091.2 34.51/space 7,247 26,890 3,520 strative(1.64%) (1.50%) (0.16%) Marketing 6,160 176 6,336 1,440 56,750 33,240 91,430 0.07/person 100 3,933 2,303(0.02%) (0.22%) (0.10%) Accounting 26,400 756 27,156 1,440 56,750 33,240 91,430 0.297/person 428 16,855 9,873(0.10%) (0.94%) (0.44%) Renting700,000 251.96 1,385.80 461.94 2,099.7 333.38/space 83,999 461,999 154,002(19.05%) (25.73%) (6.89%) Depreciation1,229,147 251.96 1,385.80 461.94 2,099.7 585.39/space 147,495 811,236 270,416(33.45%) (45.18%) (12.09%) Total 1,069,000 226,220 3,224,367*Total activity cost 346,800 1,673,678 1,203,889(78.65%) (93.21%) (53.83%)* whole activities in column (3) added Direct material cost 61,137 116,843 1,032,498(13.87%) (6.51%) (46.17%)Outsource laundry 33,000(7.48%)Hot-spring water5,049(0.28%)Total product cost 440,937 1,795,570 2,236,387Total customers 1,440 56,750 33,240Unit product cost 306.21 31.64 67.28Allocated resource costs, working sampling (Tsai, 1996) is used to opine the percentage of time spent on each of various activities for each staff member and manager. In this way an adjusted percentage of personne l time spent on each activity can be obtained. In the first stage, resources in this country inn are assigned to all activities in five activities centers by resource drivers.In the second stage, all activities costs in the five activities centers are assigned to the three country inns products. Table 2 shows activities analysis and the assignment of activities to products by activity drivers. Labor, material and utility costs traced to activities are shown in columns (1)-(3) of table 2. Columns (4)-(11) present detail about how activities are allotted to each product by drivers. For example, the driver of the cleaning activity is the true cleaning time which is total 6810.6 hours. Using the driver to trace the cleaning activity to the three products separately, and assigning 2651.4 hours, 3749 hours and 410.2 hours respectively, of cleaning time, the driver can allocate NT$ 46,611 to lodging, NT$65,904 to hot spring use, and NT$7,212 to dining.Finally, adding all the allocation act ivities costs in each product we can get the total activity costs. The total product cost is the combination of the total activities costs, direct material costs, and outsource costs (laundry, hot spring water) in each product. Unit product cost is defined as the total product cost divided by the total number of customers. The unit product costs of lodging, hot spring use and dining are NT$ 306.21, NT$31.64 and NT$ 67.28 per customer respectively in the busy winter seasons.The lodging, hot spring use and dining products of this country inn represent three market segments. After applying ABC to the country inn case, the unit costs of each of the country inns products in three market segments are clear. The cost information acquired from ABC in this case is extremely useful to the inns owners (managers) for marketing, decision making and cost-volume-profit analysis.TAMERA PLAZA INN Date Established March 2006 79 Lacson St., Bacolod City Tel No. 432-1708 Fax 709-0886 Manager Dina Serfi no E-mail emailprotected come apartification Economy Class No. of Rooms 20Rates Superior 1 1,500.00 Deluxe 8 1,300.00 Standard Double1,100.00 Standard Single900.00 Extra Matress250.00 Extra Person100.00 Last Updated September 11, 2013 Rates are subject to change without prior notice