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1 – 10 of 168Managers are constantly making decisions that affect profit. One ofthe decision‐making areas which is crucial to all managers concernsprofit planning. Attempts to show how…
Abstract
Managers are constantly making decisions that affect profit. One of the decision‐making areas which is crucial to all managers concerns profit planning. Attempts to show how cost‐volume‐profit (CVP) analysis, aided by the computer spreadsheet, can be applied to the practical profit planning situation in the hospitality industry. Paradoxically, CVP analysis is one of the most widely referred to techniques in managerial accounting, but all too often it is not used to its full potential in the operating environment. Aims at encouraging greater use of the CVP approach to hospitality profit planning.
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Hotels tend to have a high level of fixed costs, which means that highlosses will result if revenue is significantly reduced below thebreak‐even point. Hence, the traditional…
Abstract
Hotels tend to have a high level of fixed costs, which means that high losses will result if revenue is significantly reduced below the break‐even point. Hence, the traditional cost‐volume‐profit (CVP) model, which is widely used within the hotel sector to determine break‐even analysis, is an important managerial tool. However, is the basic CVP model adequate, bearing in mind that certainty does not always exist during the decision‐making process? Examines the basic CVP model and describes how to include uncertainty during the decision‐making process. By way of illustration uses a hypothetical Welsh hotel, to show how to determine probability estimates for various desired profit levels. Also considers some of the other inherent operational difficulties of the basic CVP model.
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This study aims to analyze antecedents of students’ lack of proficiency (in preparing financial statements, cash flow statements, cost volume profit analysis and budgeting) and…
Abstract
Purpose
This study aims to analyze antecedents of students’ lack of proficiency (in preparing financial statements, cash flow statements, cost volume profit analysis and budgeting) and the need for an automated financial plan (AFP) for the course entrepreneurship creativity and innovation within Higher Educational Institutions (HEIs) in Oman.
Design/methodology/approach
The study used a set of four instrument items containing questionnaires to measure the variables in this study. A cross-sectional study was carried out at various universities and colleges in Oman during the year 2020, comprising 174 students from different majors. The results were analyzed using structural equation modelling-partial least squares.
Findings
The findings of the study suggest that the students in the universities and colleges should be educated and facilitated to enable them to gain more knowledge in finance/accounting through an AFP and, thus, warrants preparation of fair financial estimation for their innovative business project. A majority of students strongly support the need for implementing an AFP for their compulsory course, entrepreneurship creativity and innovation in HEIs in Oman.
Research limitations/implications
This research is restricted to AFPs for the students in Oman who study the course entrepreneurship creativity and innovation. It is recommended that future study may extend to automated business plans for the students to improve their practical knowledge pertinent to the readiness of Omani students, as well as to give material transformation of internal environments in HEIs.
Practical implications
Unique AFP for university and college students for their compulsory course, entrepreneurship creativity and innovation provide important resources for policymakers responsible for HEIs, allowing them to improve the quality of preparing a financial plan for their innovative business ideas and new business start-ups.
Originality/value
There has been little discussion about the need for an AFP for the students who study the course entrepreneurship creativity and innovation. This study analyzes accounting standards as antecedents about students’ lack of proficiency towards an AFP for the course entrepreneurship creativity and innovation of universities and colleges in Oman which tries to fill this gap in the existing research. Hence, this study is considered as a novel approach that has not been broadly discussed in the earlier research.
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The article presents the “cost‐volume profit analysis (CVP)” for the hotel industry.
Abstract
The article presents the “cost‐volume profit analysis (CVP)” for the hotel industry.
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Ku Nor Izah Ku Ismail, Wan Nordin Wan Hussin and Mat Supian Salleh
Management Accounting and Financial Modelling.
Abstract
Subject area
Management Accounting and Financial Modelling.
Study level/applicability
Undergraduate and post-graduated levels.
Case overview
Aiman, the Area Manager of GEZ Berhad, realised the importance for petrol station operators to have an understanding of fundamental management accounting concepts such as cost behaviour and cost–volume–profit (CVP) analysis. He also believed that the petrol station operators should be proficient in using Microsoft Excel functionality and able to construct “intelligent” financial model with extended sensitivity analysis. Being a manager responsible for training the petrol station operators, Aiman would like to introduce the CVP concepts and spreadsheet model-building process to the petrol station operators, to aid them in planning and decision making. To construct the Excel spreadsheet model, Aiman sought the assistance of Rizal, a university lecturer in accounting, who in turn gathered the relevant operational and financial data from Baron Service Station, a typical petrol station under GEZ stable. The model should be flexible enough to allow the petrol station operator to anticipate, for example: What will happen to overall profitability of the petrol station if the fuel prices go up? What is the minimum volume of fuel that needed to be sold to break even? How much extra profit can be generated if credit card sale is reduced? and Is it viable to install an automated teller machines (ATM) kiosk and incurring administrative charges from bank to lure more customers to visit the petrol station? As the petrol station sells multiple products (petrol, diesel and convenience goods), the owner is also interested to know which product lines are the most and least profitable. Thus, the model should be able to generate segmented income statement with appropriate allocation of the common fixed costs to the each of the products.
Expected learning - outcomes
The case discussion is intended to achieve the following learning outcomes: students are able to prepare a financial model which include a segmented contribution income statement based on the information on product mix; students are able to calculate the break-even point and distinguish between fixed and variable costs; students are able to differentiate between traceable fixed costs and common fixed costs; students are able to build a financial model that is sufficiently flexible to allow various what if analysis to be performed; and students are able to use what if analysis tools in Excel such as Goal Seek and Data Tables.
Supplementary materials
Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
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Maliah bt. Sulaiman, Nik Nazli Nik Ahmad and Norhayati Alwi
Traditional management accounting techniques such as standard costing and variance analysis, traditional budgeting and cost volume profit analysis are said to be less useful in…
Abstract
Traditional management accounting techniques such as standard costing and variance analysis, traditional budgeting and cost volume profit analysis are said to be less useful in the present manufacturing environment. To succeed in the present dynamic business environment, tools or strategies such as JIT, ABC, TQM, process re‐engineering, life cycle assessment and target costing would greatly enhance the ability of corporations to meet global competition. Through a literature review, this study examines the extent to which traditional and contemporary management accounting tools are being used in four Asian countries: Singapore, Malaysia, China and India. Overall, the evidence reviewed suggests that the use of contemporary management accounting tools is lacking in the four countries. The use of traditional management accounting techniques remains strong. The paper concludes with various recommendations for future research, the most important of which is the need for future studies to be grounded in theory.
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After pioneering, but insular, work on the conceptualization and measurement of customer value in business markets undertaken in the 80s and 90s, interest in this topic is…
Abstract
After pioneering, but insular, work on the conceptualization and measurement of customer value in business markets undertaken in the 80s and 90s, interest in this topic is substantial since the beginning of this decade. Despite this recent interest, marketing scholars concur that value in business markets is still an under-researched subject. This contribution to the debate is threefold. The paper first proposes an own model of customer value conceptualization in business markets; based on several rounds of testing this theoretically grounded model in managerial practice indications exist to conclude that this model may offer benefits over current models.
Secondly, the paper provides a comprehensive survey of pricing approaches in industrial markets. The paper integrates this literature overview with own empirical findings. Concurrently the paper summarizes extant research on the link between pricing approach and profitability in industrial markets. The paper thirdly proposes a framework for value delivery and value-based pricing strategies in industrial markets. Proposing such a framework is both useful as well as necessary. Useful, since this framework guides new product development and pricing decisions and assists in the implementation of price-repositioning strategies for existing products; necessary, since the theoretical and practical adoption of value-based delivery and pricing strategies may have suffered from the lack of a unifying conceptual framework. Two case studies, one involving the pricing decision for a major product launch at a global chemical company, the other involving value delivery at an industrial equipment manufacturer, illustrate the practical applicability of the proposed framework.
Howard F. Turetsky and Thomas R. Tudor
The time dimension of a country is a key determinant of the time horizon prevalent in the business sector. The long‐term horizons of Japan compared with the short‐term horizons of…
Abstract
The time dimension of a country is a key determinant of the time horizon prevalent in the business sector. The long‐term horizons of Japan compared with the short‐term horizons of the United States are integral parts of their distinct business ideologies. There is a direct impact on their respective financial practices. A comparative analysis of the financial management ideologies, practices and techniques, within the framework of time horizon, offers an explanation of Japan's inordinate economic success in the global market.
Amith Vikram Megaravalli and Gopinath BS
The case presents students with the opportunity to do the following: students can pre-work questions; understand the relevant factors to be considered in the decision to expand;…
Abstract
Learning outcomes
The case presents students with the opportunity to do the following: students can pre-work questions; understand the relevant factors to be considered in the decision to expand; and list out the industry and macro-environment factors affecting the expansion decision. Assignment questions help understand the various measures used to evaluate the financial performance of the company; understand the practical implication of incremental analysis to estimate the profit; assess the operating profit and margin of safety of the restaurant Shri Sagar with and without expansion; and critically evaluate the impact of uncertainty on projected sales using the sensitivity model.
Case overview/synopsis
Shri Sagar (Central Tiffin Room – CTR) was started by Y.V. Subramanyam and his siblings (Y.V. Srikanteshwaran, Y.V. Krishna Iyer and Y.V. Ramachandran) in the 1920s, specialised in Benne (Butter) Masala dosa, Maddur Vada and Mangalore Bajji. In Bengaluru, there are few restaurants, which have the legacy of more than 50 years such as Vidyarthi Bhavan, Mavalli Tiffin Rooms and Shri Sagar (CTR). Shri Sagar has witnessed three different ownership right from 1920 to the present. Ganesh, an MBA graduate, took the active participation in the business from 2018 and found there are potential opportunities to expand the business. Although business was doing well, Ganesh wanted to assess his company’s financial strength before proceeding. He would require a financial forecast that took into account the strength of the competition and the peculiar nature of the restaurant business in Bengaluru. Ganesh wanted to assess the expansion plan; to address the proposed plan, the case had used cost–volume–profit analysis and sensitivity analysis techniques to make the students understand how these techniques can evaluate the alternatives.
Complexity academic level
This case is best used while teaching Managerial Accounting, which is a core course in MBA program with a module on break-even-analysis or it can also be used in an executive education class with a similar purpose. The teaching plan can be used for MBA students and entrepreneurial training programmes, which involve training on important managerial decisions, which includes business expansion, estimating business profits/revenue targets, etc. It assumes some basic knowledge of cost–benefit analysis concepts where participants have already exposed some basic understanding of break-even analysis and what-if analysis.
Supplementary materials
Teaching Notes are available for educators only.
Subject code
CSS 1: Accounting and Finance
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Iona Yuelu Huang, Louise Manning, Vicky Wood, Katy L. James, Anthony Millington, Vasilis Grigoriadis and Shane Ward
This research aims to explore retail managers' views on how food waste (FW) management activities contribute to sustainable value creation and how the customer value proposition …
Abstract
Purpose
This research aims to explore retail managers' views on how food waste (FW) management activities contribute to sustainable value creation and how the customer value proposition (CVP) for a given food retailer interacts with their approaches to FW management.
Design/methodology/approach
A three-stage exploratory qualitative approach to data collection and analysis was adopted, involving in-depth interviews with retail managers, documentary analysis of multiple years of relevant corporate reports and email validation by seven major UK grocery retailers. Thematic content analysis supplemented by word similarity cluster analysis, two-step cluster analysis and crisp-set qualitative comparative analysis was undertaken.
Findings
FW management practices have been seen by retail managers to contribute to all forms of sustainable value creation, as waste reduction minimises environmental impact, saves costs and/or serves social needs, whilst economic value creation lies at the heart of retail FW management. However, retail operations are also framed by CVP and size of a retailer that enable or inhibit the adoption of certain FW management practices. Low-price retailers were more likely to adopt practices enabling them to save costs. Complicated cost-incurring solutions to FW were more likely to be adopted by retailers associated with larger size, high quality and a range of services.
Originality/value
This study is the first of its kind to empirically explore retail managers' perception of sustainable value creation through FW management activities and to provide empirical evidence of the linkages between retail CVP and sustainable value creation in the context of retail FW management.
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