The Significance Of Cost Control In Hotel Industry

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Project and Seminar material for Public Administration


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

  1. Is the costing system appropriate to the organization?
  2. Do the reports, statements and analysis produced by the costing system contain the relevant information for intended purpose?
  3. Are they addressed to the person responsible for planning/decision making/control?
  4. Are the reports and statements produced at appropriate intervals early enough to be effective?
  5. Is the information produced in a relevant form and to a sufficient degree of accuracy for the intended purpose?

It follows from these factors that every costing system will, in certain respects be unique, because it must be designed to suit the particular organization, products and processes and personalities involved. Of all the numerous control, stores control and quality control due to the limit of the scope of the research work.

Effective and efficient cost control will be discussed which basically requires an agreed plan that sets objectives and goals to be achieved etc. more will be discussed in section 2.3 of this chapter.

The significance of cost control in an organization cannot be over emphasized amongst which are:

To indicate to management any inefficiency and area of waste either of materials, labour, expensive use of machinery, equipment and other productive resources.

To provide accurate cost data for goods pricing policy, more will be seen in section 2.4 of this chapter.

Finally, cost control is faced with some problems which include ineffective delegations of authority, lack of defined goals of an organization, lack of timely reporting etc. details discussion or problems associated with cost will be section 2.5 of this chapter.

1.1 Introduction

This research work o cost control and its significance is designed specifically for Hotel Industry in Nigeria background. It is prepared with immense Contribution to those who recognize the importance of cost control in Hotel Industry, especially in the recent increase in Hotel Industry in Nigeria.

A Hotel Industry is mostly set up chiefly for profit motive. To achieve this, cost control must be effectively set

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