Management decision making

LO 1- Understand the importance of costs, volume and profit for management decision making in travel and tourism You are required to carry out a research as specified in the assignment brief and use supportive materials like books, websites, etc.—and give a feedback to the findings on P1.1, The answers need to be reflected to the instructions as specified and chosen for the purpose. Answers without application to Merlin Entertainments Plc. will be marked as resubmission. task 1 P1.1 explain the importance of costs and volume in financial management of travel and tourism businesses using Merlin Entertainments Plc. as your case study Task 2 LO2- Understand the use of management accounting information as a decision making tool in travel and tourism businesses P2.2 assess the use of management accounting information as a decision-making tool for Merlin Entertainments Plc. to give u more explanation i send my clase mate submitted assignment as well. (my class mate submitted assignment ) Task 1:1.1: Importance of costs and volume in financial management of travel and tourism sector: Merlin Entertainments is one of the most reputed companies that operate in around 110 attractions in almost 23 countries. This segment of the report assist to evaluate the significance the costs and volume impart on to in financial management practices in Merlin Entertainments. Cost-volume-profit analysis is the tool that is mostly used as the important technique for the managers of Merlin Entertainments. CVP analysis assists to assume the constant selling price per unit inclusive of the variable costs per unit(Anil Kumar, et al., 2010). The importance of CVP analysis can be summarized as follows: • Once the financial managers of Merlin Entertainments carry out the CVP analysis, they are able to understand the level of sales that would generate a particular amount of profit of the company. • By the CVP analyse the financial managers are able to detect the actual expenses; costs and the amount of sales they make annually so as to raise the profitability. The managers can anticipate the required changes in the costs of their products that affect the profitability structureof Merlin Entertainments. • Cost-volume-profit analyses assist the financial managers of Merlin Entertainments to add the targeted income with the fixed costs associated with the travelling and tourism operations inclined with the actual production and thus assist the managers to yield the contribution-margin ratio (Foster, 1986). • Through the CVP analysis, it is possible for the financial managers to take appropriate decisions about the company’s breakeven point and thus would assist the managers of Merlin Entertainments to evaluate the processes in which the spending and the investments of the company would contribute to the success story of Merlin Entertainments Plc in the UK. • CVP analysis is a portrayal of the costs structure of travellingand the operation departments and the production capacity of the management and thus assists the financial managers to take appropriate financial decisions and the managers are able to concentrate upon the variable costs of Merlin Entertainments plc. Thus from the above discussion it can be observed that the costs and volume of production are the two fundamental parameters that yields up to CVP analysis in Merlin Entertainments. 2.2: Assessment regarding the use of management accounting information: In order to maintain efficiency in the business the company has to suffice the procedures so as to earn higher returns in the long run. So to achieve these the company has measured the circumstances that have been discussed underneath: Planning: Merlin Entertainment Plc has planned to maintain efficient activities by providing amusements to the individuals, which visits the resorts in their holidays. Providing multifarious facilities with proper artificial amusements will be implemented so as to increase the craze of the inhabitants with proper marketing policies. Controlling: The overall control concerning the planned activity has been operated by special efficacy among the handling operators of the organization so that no such discrepancies will have to be face by the respective tourist in the beautiful places. Decision-making: The management officials have made the decisions in order to achieve higher returns through providing cent percent satisfaction regarding the amusement and rejoice felt in the seasonal periods as well as in the normal duration. Forecasting: Proper forecasting regarding the business operation will help to achieve higher returns without any discrepancies in handling the financial stability in the financial year. Proper forecasting will reduce the implication of financial loss and damage in the overall operation period of the business. Pricing: Proper pricing strategies have been taken by the management officials of Merlin Entertainment Plc so as to attract the individuals as well as the tourist not only for a single time but repeatedly. Proper pricing for enjoying the amusements products will also enhance the brand value as well as the customer satisfaction, which in turn will enhance the overall revenue of the firm. The management accounting process has been accustomed with certain tools that are regulated so as to make the decision for the Merlin Entertainment Plc for the purpose of travel and tourism. Thus, the accounting information are necessary to uphold the circumstances in order to maintain the efficacy of the overall management. Administration bookkeeping is major in vital arranging. At the point when a business is hoping to settle on a key choice, for instance, whether to add to another product offering, obtain another business or venture into different nations, the different achievements has prepared administration bookkeeper can give counsel. They can utilize various instruments to help choice making. These incorporate proportion examination, spending plans and conjectures, for example, income, and differences. The significant ways of measuring the decision and the toolsthrough assessing the proportion, is one variable measured as far as another. Proportion examination is one apparatus in the key choice making procedure. Administration bookkeepers use proportions alongside other interior business information and openly accessible data to survey parts of a Merlin Entertainment Plc’s execution (Myer, 2009). The fundamental proportions utilized as a part of administration bookkeeping are: Proficiency or action proportions, including liquidity - These shows whether the business can pay its obligations. They take a gander at whether the advantages of the organization its structures, land hardware could reimburse any obligations. Outfitting demonstrates the long haul money related position of the business. It can show parity of financing in a business i.e. the amount of cash is from credits on which it needs to pay premium and what amount is from shareholder stores on which it needs to pay a profit to shareholders. More cash from advances conveys more cost and hence more hazard. Efficiency proportions - indicate how well a business is getting along. They identify with the business destinations, which may be to make benefit or acquire an arrival on speculation, or gather its obligations rapidly. It is essential that administration bookkeepers take a gander at all the pertinent proportions when settling on a choice. Administration bookkeepers should have the capacity to create exact examination, right conjectures, and a disconnected and expert review to a Merlin Entertainment Plc’s execution. These add to the future achievement of a business.


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