Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Hotel Management (BHM)
Course Description
:This course aims to provide comprehensive knowledge on cost ascertainment, classification, controlling and estimation of cost required for managerial planning and decision making. It covers cost manag ement, income under variable and absorption costing, cost volume profit analysis, price determination, capital expenditure planning, budgeting and Decision ma king under different situations.
Course Objective
:The objectives of the course are to provide the students with in -depth knowledge of cost and management accounting tools and techniques in order to enable them to accumulate, classify and analyze cost information required for decision making for maximizing the profit of Hospitality Industry. Course Description This course aims to provide comprehensive knowledge on cost ascertainment, classification, controlling and estimation of cost required for managerial planning and decision making. It covers cost manag ement, income under variable and absorption costing, cost volume profit analysis, price determination, capital expenditure planning, budgeting and Decision ma king under different situations.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Fundamentals of Cost and Management Accounting
- Concept, meaning and b ranches of accounting, Limitations of fi nancial accounting, Meaning of Cost accounting and manage ment accounting, Objectives of Cost and management a ccounting, Role of Management Accounting in Decision Making, Relationship between C ost and management accounting, Limitations of Cost and management accounting.
Unit 2. Cost concept, Classification & Estimation
- Meaning and Classification of cost , Meaning and method of costing, Meaning of Menu costing, Meaning of Accommodation costing, Separating costs into fixed and variable elements using High Low Method and Least square method, Estimation of cost.
Unit 3. Cost Volume Profit approach to Decisions
- Introduction, significance and limitations of C ost volume profit analysis, Assumption of C ost volume profit analysis, Approaches to Break even analysis: Formula approach, Graphical approach, Contribution margin analysis.
Unit 4. Income Recognition
- Meaning of Absorption costin g and Variable costing, Differences between Absorption costing and Variable costing, Income Measurement under Variable Costing and Absorption Costing
Unit 5. Price Determination in the Hospitality Industry
- Meaning and importance of pricing , Approaches to pricing: Cost plus pricing method, Gross profit or gross margin method, pricing hotel accommodation, pricing food and beverage.
Unit 6. Budgeting and Budgetary Control
- Concept of budget, budgeting and budgetary control, Purpose and functions of budgeting, Preparation of various budgets: Sales revenue budget, Produ ction budget, Operating expenses budget, Cash budget, limitation of fixed budget, concept of flexible budget and flexible budget for overhead cost control on various levels of activity.
Unit 7. Capital Investments decision in the Hospitality Industry
- Concept of Capital investment Decision, Cash flow and pro fit and loss account, Steps of C apital investment Decision: a. Cash flow Estimation, Net cash outlay (NCO), Cash flows after tax (CFAT), Net cash flow for final year b. Evaluation techniques of capital investment project.
Unit 8. Decisions regarding alternative choices in the Hospitality Industry
- Concept of Decision Making, Costs related w ith Decision Making : Opportunity cost, Differential cost, Imputed cost, Out of pocket cost, Sunk cost, Relevant cost and Irrelevant cost, Decision involving alternate choice: Make or buy decision, Drop or continue decision, Accept or reject order decision, Decision for continue or closure in off season.
Suggested Readings:
Garrison, R.H. & Noreen, E.W., Managerial Accounting, McGraw-Hill Companies, Inc. I.M. Pandey, Management Accounting; Vikas Publishing House (P) Ltd. A-22, Sector 4, Noida – 201 301 Lucy, T., Cost Accounting, Tata McGraw Hill Co., New Delhi. Lynch & Williamson, Accounting for Management Planning & Control, Tata McGraw Hill Co. M.Y. Khan & P.K. Jain, Theory and Problems of Management and Cost Accounting; McGraw - Hill Education (India) Ltd. B-4, Sector 63, Gautam Budh Nagar, Noida – 201 301. S.P. Jain & K.L. Narang, Cost and Management Accounting; Kalyani Publishers, 23, Daryaganj, New Delhi-110 002