THE SIGNIFICANCE OF COST CONTROL IN HOTEL INDUSTRY

ABSTRACT

This project topic “The Significance of Cost Control in Hotel Industry” tends to examin

e the control of cost in most Hotels, taking cognizance of their productive cost, selling and distribution cost as it applies to the Hotel Industry. Again it is to set up effectively the prevention of material and time wastage that is, cost control is very important because it is centered around improving profitability and effective use of resources. This is important so as to provide an insight study of cost control that is applicable in the hotel outfit. The researcher is able to introduce the purpose of the study, significance of the study, scope and limitations and the hypothesis. There is also literature to highlight the cost control in hotel industry: method of the research work is highlighted. Data collection, sampling techniques and administering of questionnaires to staff of Agura Hotel. The recommendations are part of the personal observations made during the research work.

CHAPTER ONE

1.0            BACKGROUND OF THE STUDY

Many academic and purchasing Accountants consider cost control as the major benefit derived from the use standard. Cost control can be defined as the appraisal process and actions taken to keep cost .within tolerable limits as prescribed by Management. These limits can differ from one operation to the next. For instance, the head of food and Beverage Department in a Hotel Industry might set a tolerance standard to attend to guests quite different from that of Laundry Department.

Standard from the basis upon which determinations are made that cost has gone out of control. Actions can then be taken to remedy the situation in future. If this standard is set carefully, they provide better guidelines than previous period actual costs. Rossell JH  (1983).

An important part of the management task in a Hotel Industry is to ensure that operations, department, process and cost are under control and that its constituent parts are working efficiently towards agreed objectives. These are numerous control systems within a typical Hotel Industry. For example, material control, stores control, room control, quality control, profit control and product control. The detail analysis and location of all expenditure, the calculations of job and product cost, the analysis of losses and scraps, the monitoring of labour and department efficiency and the other outputs of the costing system provide sound basic information for financial control.

Management are also concerned to know what cost will be in future so that appropriate plans and decisions can be made in good time. Also, having some standards or targets against which to compare actual cost greatly assists the control functions.

It cannot be emphasized too strongly that if information produced by costing system is not useful for control, for managerial decision making or for planning usefulness, the following should not be prepared. To ensure cost control and its usefulness, the following factors should be considered.