Free Essay: Cost Accounting Project

Published: 2019-10-21
Free Essay: Cost Accounting Project
Type of paper:  Essay
Categories:  Management Accounting
Pages: 3
Wordcount: 589 words
5 min read

The system that a company relies on to gain cost information plays an essential role in supporting the process of making decisions. A vital task of a company's management is to ensure they gain significant control over processes, operations, and activity segments rather than eventually on costs. Even though when an organization reaches its goals most monitoring systems compete, such as quality control, production control, and stocks control, information concerning cost is vital since it facilitates in monitoring the results of other activities. Hence, within the full-service hotel, it is essential to consider embarking no comprehensive costs analysis, production cost calculation, quantify losses, as well as estimate the efficiency of work, thus offer a solid groundwork for controlling finances (Hansen & Mowen, 2014).

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In the case of the full-service hotel, it is the role of the managers to make sure that the decisions they make can direct the organization in reaching its goal. Most of the aims in this sense comprise of financial aspects, especially profit and revenue targets. The costs levels that influence the decision-making process have a significant impact on a company. Thus, the process of reporting accurate estimates, actual costs, and ideal integration of the expenses incurred when managers make decisions serves as an essential element that directs a business in meeting its targets in line with additional benefits to the hotel. Here, it is vital to consider implementing a decision-making model that can facilitate in reaching effective decisions from the costs information present within a company (Schmitz, 2012). The ideal framework in the case of the full-service restaurant would be the 7-Steps model.

7-Steps Model (Hansen & Mowen, 2014)In the full-service hotel, the issue of relevant costs information serves as the major area demanding a considerable emphasis on decision making. Within the hotel, the manager needs to consider selecting one of the several alternatives. Costs that do not change irrespective of the choice that the manager would choose are irrelevant based on the decisions that the managers make. For a decision based on cost regarding outsourcing, the manager needs to lay emphasis on the subcontract costs as well as the in-house savings. For instance, if the firm pays entire rent irrespective of having a minimal employee base, the rent does not serve as a relevant cost. In this sense, the ideal decision for the company to focus on is moving to a smaller establishment that requires minimal rent, hence making the rent emerge relevant (Schmitz, 2012).

Gathering information on step costs is also essential on allowing the hotels manager to avoid critical discrepancies related to the calculation of costs. Step values serve as a merger of fixed as well as variable expenses. In the case of the step costs, they would operate for a particular duration before gaining new values over time. The usual step costs that the full-service hotel would encounter would be those linked with a need for additional equipment or more output. In case the volume of production goes past certain limits, the costs grow significantly to new as well as higher levels mostly because the organization would require extra equipment or cope with increased production requirements (Hansen & Mowen, 2014). Here, it would be essential to incorporate information on step costs when making decisions to avoid going past step limits or when it comes to including related higher costs.


Hansen, D. R., & Mowen, M. M. (2014). Cornerstones of Cost Management. New York: Cengage Learning.

Schmitz, A. (2012). Factors That Affect Pricing Decisions. Retrieved from

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