Tourism is currently one of the fundamental economic activities of the Cuban economy. As a service provider, the Hotel Tryp Cayo Coco, is facing a difficult situation as it faces a highly competitive and conflicting market, for which it has to increase its efficiency more and more, for which it is necessary to evaluate the performance of their areas analyzing their economic situation. A new business culture prevails and the use of new management accounting tools in order to raise levels of efficiency and profitability. This hotel works with the objective of raising its levels of competitiveness and achieving sustained profitability and employs alternatives in order to reduce its costs.In order to achieve the desired results, strategies are drawn up and instruments are designed, one of which is the evaluation of the performance of organizational structures based on activity-based costing. The designed procedure contributes to decision-making and increases the competitiveness of the Tryp Cayo Coco hotel in the Jardines del Rey tourist destination.
INTRODUCTION
The notable increase in new markets, the constant incorporation of new technologies, together with the increase in the world population, whose needs increase proportionally to the development achieved, have been decisive factors for the production of an enormous flow of goods and services directed to all such consumers, and for this it is necessary to design an infrastructure to guarantee the satisfaction of their needs and the organization that generates them.
Tourism has increased remarkably since the fifties of the last century, it has been influenced by new means of transport, modern communication techniques and the cultural approach of the different regions of the planet, so this sector has been one one of the fastest growing in many countries.
Tourism activity has developed so much in this period that it is considered to be the third largest source of capital movement in the world, generating economic activities with great profits and a significant level of new investment.
2015 broke records in the arrivals of foreign visitors to Cuba when three million 524 thousand 779 visitors arrived in the Greater Antilles. The growth of 17.4% makes it, among other reasons, the most dynamic sector of the Cuban economy.1
According to the General Director of Marketing, María del Carmen Orellana Alvarado, 2015 was a record year for the tourism sector in Cuba, from the arrival in the country of 3,524,779 visitors, which meant a growth of 17.4 and an over-fulfillment of the plan of 11%.2 As he pointed out, that period represented an increase of almost 500 thousand more visitors than the previous year.
“We can say that it grew in visitors and tourists days not only in Havana and Varadero, but also throughout the country, which is important for economies to move not only in the Cuban capital.
Tourism in Cuba has become the fastest growing and potential sector and as a strategy it is the base to develop other productive sectors and new services, since it is the main source of income in fresh foreign currency that the country has, and thus it should be maintained for years to come.
It is appreciable that Tourism is the most important sector of the country's economy, since it is contributing income directly like no other… it is increasingly distancing itself from the rest of the sectors by its contributions, and even more, by the multiplier effect towards the internal economy ".3
"There is no doubt that no branch of the country's economy promises more, offers more, is more important for the future, for our development than Tourism. Since the decision was made to promote Tourism widely, we started with that idea and the years of the special period have proven it. ”
According to Vázquez, LR (2013), Cuba bets on a diversification of its visitors and leisure products at the start of the high tourist season, at which time Jardines del Rey, which make up the islets north of Ciego de Ávila, classifies it as a hotel destination fastest growing country.4
The services sector has had spectacular growth. This growth brought with it the incorporation of an increasingly important number of companies operating in the service sector and the consequence of which was the need to incorporate strategic management tools, previously applicable only to goods-producing companies, to create a vision oriented towards customer acquisition and retention. The rules of the competitive game have required companies to quickly adopt these tools to position themselves competitively.
This only confirms that for a company or organization to stand out and be competitive, it must take measures aimed at achieving a strict reduction in its costs.
The organizational structures of tourism companies must be flexible in order to be competitive and thus adapt to the current demands of this highly dynamic sector.
To achieve competition in the market, it is necessary to use systems and mechanisms for planning, controlling and using resources with a higher degree of economy, but adequate methods must be available to examine and evaluate the efficiency and effectiveness of compliance. of these aspects for managerial decision making in correspondence with the behavior of the environment and the scenarios where the organization moves.
The implementation and application of new cost systems and techniques for their analysis and control constitute pillars of transcendental importance in achieving these objectives, which can be considered vital for the survival of the entities and their future development.
It is necessary to evaluate the performance of the organizations allowing to know current status and in this way make decisions that contribute to its development.
The tourist destination Jardines del Rey is at the forefront of the development trends that the sector has imposed and in order to achieve the necessary cost levels, it guides the efforts of its subordinate organizations, this work being further strengthened in the different hotel chains.
To the north of the territory of Ciego de Ávila, located in the center-east of Cuba, between the province of Sancti Spíritus (west) and that of Camagüey (east), is the tourist destination Jardines del Rey, formed by the Cayos Coco, from 370 km²; and Guillermo (13.2 km²).5
This holiday pole has a modern hotel plant with 15 facilities of category 5 and 4 stars, on the beachfront under the All Inclusive modality. Due to its values, Cayo Coco and its surrounding islets belong to the Buenavista Biosphere Reserve.
The tourist offer of the hotels has been conceived to search as a key element, a stable and balanced demand; that is to say, work to guarantee a continuous flow of tourists throughout the year, the systematic elevation of the average length of stay and a high rate of repetition of visits.
The Tryp Cayo Coco Hotel belongs to the group of hotel facilities that operate in the Jardines del Rey tourist destination, it is one of the oldest hotel facilities in it. Founded in 2003 as an independent hotel, it works in search of alternatives that allow it to achieve profitability and competitiveness on a sustained basis. On its way to excellence, it pays special attention to the most active and dynamic element of its process, human capital.
When evaluating and analyzing the economic results by areas of responsibility, their managers are aware of the need not only to emphasize how much is spent, but also the person responsible for the expense generated, however, this aspect is not adequately addressed..
In a diagnosis carried out, based on scientific research techniques and methods, among which stand out: the documentary analysis, which provided all the necessary information related to the registration, control and analysis of costs and expenses, the assessment of its planning, which is supported by general budgets and the measurement of performance by departments or processes, with a very general character, which limits decision-making in areas where deviations of great significance occur.
The exchange with specialists and managers was carried out, through unstructured interviews, as well as the contrast with the specialized bibliography to corroborate the correspondence between the practice of the Hotel Tryp Cayo Coco and the existing theory regarding performance evaluation.
Due to the importance that the efficient use of its resources represents for the studied organization, as well as obtaining reliable information that allows the administration to better analyze the economic indicators and make the right decisions, the following scientific problem is defined:
Lack of an instrument that allows evaluating performance by area of responsibility, which is manifested in insufficiencies in cost control and decision-making at the
Tryp Cayo Coco Hotel in the Jardines del Rey tourist destination.
The object of the research is management accounting and ABC costing methods, on which studies were carried out that allowed determining, as a field, the evaluation of performance by area of responsibility.
Based on the above considerations, this work was carried out at the Hotel Tryp Cayo Coco, which has as its fundamental objective.
Design a methodological procedure to evaluate performance by area of responsibility, based on the combination of management accounting techniques and ABC costing methods, that contributes to the improvement of cost control at the Tryp Cayo Coco Hotel in the Jardines del King.
Starting from the importance, topicality of the subject and the significant contribution to tourism in Cuba, the following hypothesis can be formulated:
The application of a methodological procedure to evaluate performance by area of responsibility, based on the combination of management accounting techniques and ABC costing methods, will contribute to improving cost control at the Tryp Cayo Coco Hotel in the Jardines tourist destination. King.
To fulfill the objectives proposed in the research, theoretical methods were applied (abstract logic, induction / deduction, analysis and synthesis); as well as empirical methods for both capturing and analyzing the information. Among them we can mention different direct and indirect techniques for collecting information. Among the first ones, the following stand out: the observation, the documentary review, which made it possible to select standards and other information necessary to determine the rates of allocation of expenses, and the diagnosis made in the facility under investigation, in addition, the interviews and surveys: aimed at managers and hotel specialists, to obtain information on the budgeting, decision-making and performance evaluation process,as well as clients and workers to measure the degree of satisfaction and quality of service.
Indirect techniques were based on the analysis of historical series of hotels, which allowed us to discern regarding the elements studied.
Statistical methods: descriptive statistics for the processing of the surveys and econometric modeling to determine the sample size and project the measures of total activity. All the analyzes have been based on the use of the professional package SPSS v.12.00 (2003).
The work is structured in three chapters.
In Chapter I, the conceptual and contextual analysis of the research object is carried out and the entity studied is characterized.
In Chapter II, the Tryp Cayo Coco Hotel is characterized and a methodological procedure is designed to evaluate performance by area of responsibility.
Chapter III analyzes and discusses the results, so the results achieved with the application of the performance evaluation procedure to raise the quality of the cost calculation process are presented.
Tables and graphs are attached to facilitate the understanding of the results.
CHAPTER I. THEORETICAL FOUNDATION. MANAGEMENT ACCOUNTING AND ACCOUNTING BY AREAS OF RESPONSIBILITY.
The objective of this Chapter is to expose the theoretical foundations that constitute the object and the field investigated with the present work, which is why it begins with the historical background of Management Accounting, from whose point of view the evolution of this branch of the accounting, where accounting by areas of responsibility and performance evaluation at the level of these organizational structures occupies an important place.
1.1. Management Accounting Evolution.
To delve into the origin and development of Management Accounting, it is important to define the concepts of costs and expenses as terminology to follow. There are different criteria of the specialists on them, therefore, no similarity defined so far is perceived. Among the authors studied in this regard, the following stand out: Marx (1867), Pedersen (1958), Lawrence (1960), Horngren (1969), Polimeni, Fabozzy and Adelberg (1990) and Mallo (1991).
Cost is defined as the amount paid to obtain a product / service and an expense as a cost that has generated a benefit and has already ended.
Being composed of three elements that are defined below.
x The first element is made up of direct materials (MD), these are those that can be identified in the production of a finished product and that can easily be associated with the product / service.
x The second, direct labor (MOD), which is the physical or mental effort expended on the transformation of raw materials and materials into the final product.
x The third element is made up of indirect manufacturing costs (CIF) that are used to accumulate indirect materials, indirect labor and all other indirect manufacturing costs. These concepts are included in manufacturing overhead because they cannot be directly identified with specific products.
The cost is a part of the value that is intended to compensate the production costs and guarantee the simple reproduction, for this reason, its determination constitutes an effective instrument in the management process and an economic indicator that allows the company to measure its economic efficiency.. From the economic thought of Che, we take what refers to the cost when he expressed ……. The efficiency of administrative management in socialism cannot be measured exclusively by the amount of values created, but by the extent to which economic financing structures contribute to bringing the new society closer by transforming men, therefore the cost would be that it would really give, the index of the company's expenses, no matter that they were higher or lower than the price level,what is important is the continuous analysis of the company's expenses in favor of a certain time measured by its success in reducing costs.6
Based on the foregoing, it is considered preliminary, an interpretation of Che's economic thought, associated with reality and the current present, must rescue and enhance the role of production cost within the economic movement that exists in the country and the company..
With this we will go to the root cause of the problems and not to the effects, the reduction in cost, the increase in labor productivity and the production efficiency associated with them, are the main factors that provide the obtaining of greater surpluses, income or profits to society and the company.
The cost information is of vital importance for decision making, since it has the purpose of:
1. Guarantee the analysis of production efficiency, facilitating the adoption of appropriate measures to correct deviations from the planned cost and increase the efficiency of companies.
2. Contribute to the correct foundation of the plan's indicators.
3. Facilitate the analysis of price formation7.
Hence the importance of cost accounting, since it constitutes a fundamental subset of management accounting, in such a way that a company can have developed cost accounting without having implemented management accounting, on the contrary, a company that has a management accounting, necessarily, must have developed a cost accounting.
Referring to cost accounting Sáez Torrecilla, A. (2000) defined it in its relationship with management accounting, as a "… information system about the productive activity of a company that is relevant and timely for planning and control, required by the management of the company. If we relate to finance "as an information system which allows the valuation of goods and services received from the productive activity of the company… 8
Digging Deeper, note that the cost accounting fundamental objective internal analysis of the company, seeking the minimization of costs and its performance sits on three basic objectives:
1. Analysis: Provides a frame of reference.
2. Evolution: Knowledge of the different costs of the economic unit and evaluation of its economic elements.
3. Decision support: Establishing forecasts, establishing relationships and forming a numerical base for the explanation of deviations.
However, based on the aforementioned and in light of the changes in the environment and their influence at the current stage, it is necessary to analyze cost accounting, within the framework of management accounting.
After the 80s, a technological revolution has occurred in production processes, companies changing their production strategies to adapt to new conditions, so cost systems have had to be perfected and this, among other causes, has caused the transition to Management Accounting.
The deep and turbulent process of change, which affects all the structures of society, has also affected and generated changes in the business world, from the point of view of decision-making. The current environment of competition requires companies to make constant efforts in many aspects, from redesigning processes, improving productivity and reducing costs, to achieving quality for customer satisfaction.
Regarding these changes in the environment, Johnson HT. (1987); raised "… traditional accounting systems, cause a distortion in the costs of specific products, determined by the practice of distribution, indirect costs between products, according to productions that vary directly to the volume of production, labor, the cost of the material, machine hours….9
Currently, there are a variety of authors who approach this problem with great certainty, being the most representative work that has contributed most decisively to the new cost accounting strategies, that of the author Horngren, CH. T. (1992), which refers to the following purposes to be achieved by this matter, which are summarized in: x Plan and control current operations.
x Give information for non-current special decision-making and long-term planning.
x Assess inventories and determine the results for the period.
For his part, Sáez Torrecilla, A. (2000), focuses on Management Accounting, “… as a responsible information system with the relevant and timely accounting presentation for timely decision-making. The timeliness of accounting information sometimes requires that anticipated facts be reported through budgets.10
In this regard, the Spanish economist Ripoll Feliu, V. (2000), expressed “…. Management accounting, in particular its design, implementation and operation, must be linked, on the one hand, to business strategy and organizational structure and, on the other hand, must consider its influence and interrelation with the people who make up the company and with the culture of the organization ”.. 11
The main concern of cost management is to provide information and control to support the administration in tasks related to the rationalization of costs and procedures, to exercise control over internal operations, as well as the preparation of Special information to resolve strategic or non-routine situations in the company and in general make managerial decisions.
A summary of the previous elements, allows us to emphasize that the objectives of Cost Accounting in the management process are framed in the following elements: Planning and control and valuation of goods and services.
On a solid basis, executives need to make managerial decisions that are based on techniques based on the elements indicated above.
If these elements are basic to the achievement of their managerial functions then, it would be worth evaluating the repercussion of the changes carried out in Cuban companies and entities and the necessary correspondence that must exist between these and the projection and / or planning, recording and control techniques. of costs, considering that this is a determining indicator in the result and in business efficiency and effectiveness.
To analyze management accounting, it is necessary to analyze the paradigms on which it must rest, to support new challenges and demands, among the most significant are:
x The analysis of the basic pillars intended to meet customer satisfaction. x The activity budget, as a tool for analysis and control. x Analysis of activities in the Micro-environment.
Within the basic pillars, some critical variables are considered, among which are:
x Added value management: allowing a change in the direction of Management Accounting, going from systems that revolve around cost to others more concerned with value management and customers, knowing which are the activities that generate value, compared to those that produce waste, defects, etc.
x Cost Management, which allows the calculation of the cost of production, delimiting those activities that generate value, eliminating apportions.
x Quality, seen from a systemic approach that allows identifying the true costs associated with it, through the activities necessary for prevention and inspection.
x Innovation in products, which allows to show what are the resources that will be compromised in the design and manufacture of a new product.
Management accounting is the control mechanism, which management can use to promote the organization's members to act in accordance with the objectives of the company's management.
So far, it has been analyzed how management accounting has become a new science that allows searching for faster information for the decision-making process. However, management accounting currently uses a set of management tools such as activity-based budgeting, the value chain, activity map, cost drivers and the ABC and ABB, which allow evaluating and controlling costs.
In the analysis of management accounting in the micro-environment of companies, it is important to work on planning, analysis and control, since they offer relevant information for the evaluation of alternatives and the decision-making process.
All organizations make plans. You cannot conceive any, whose executives are not thinking about the future of the organization, that is, what are its objectives and what will be the best method to achieve them. A company that does not work subject to plans is simply an incoherent amorphous mass, without any direction and not properly an organization. 13
Without adequate cost planning, there cannot be adequate control, which is why it is necessary to correctly predetermine them, to serve as a basis for comparison, to determine variations, analyze them and take the necessary measures to correct them..
In recent times, we have been working on the Master Budgets, which cover the entire environment of business activity, encompassing the impact of both operational and financial decisions, however, this is only referring to the spending budget for activities due to their relationship with the management accounting process.
One of the fundamental limitations that management presents in many companies is that the consequences that different decisions will have on the economic and financial situation are not evaluated sufficiently in advance.12
The importance of this evaluation is evident: the employer must know in advance what situation each of the decisions he will take will lead him to; keeping in mind that many of these decisions can have far-reaching consequences.
For this reason, it is very important to pay attention to the main elements of the planning process, which can be of great interest to the entrepreneur. Planning will serve as a tool to anticipate and prepare for the future and will teach you to look at it not only with the eyes of your wishes, but also with realism and foresight.13
For Ackoff “planning is projecting a desired future and the effective means to achieve it. The need to plan in organizations is so obvious and so great, that it is difficult to find someone who does not agree with it… ”. At present, as well as in the near future, planning will have to be adapted to the characteristics of the company and the situation in which it is carried out. However, there are certain generally acceptable standards.14
The budget is an integrated and coordinated plan that is expressed in financial terms regarding the operations and resources that are part of a company for a given period, in order to achieve the objectives set by senior management.15
From this point of view, the budgets have as objectives the planning, the coordination, the direction and the control for the achievement of the planned goals.
As a planning technique, budgeting can be conceived and carried out from different points of view, however, in general, it adjusts to two modalities treated in the literature consulted as: x Rigid budgeting. x Flexible budgeting.
The rigid or fixed budget consists of preparing a budget for a certain volume of estimated activity, not making any type of adjustment when the actual activity differs from the estimated one. They are usually based initially on certain defined situations, which are taken as a starting point, and the actual results are compared with the previously established assumptions. Fixed budgeting is convenient only if it can be estimated with a narrow margin of oscillation, the volume of activity of the company, and when costs and expenses show an easily predictable behavior.
Business organizations for which the estimation of activity levels is imprecise due to the influence of probabilistic factors, such as those related to the climate (rainfall, humidity, temperature) and / or depend on the budget, do not adjust to this budgeting technique. behavior of living organisms, an example of these are companies in the agricultural sector.
A flexible budget involves the development of a set of alternative budget plans that correspond to the different levels of activity envisaged, conceptualized as a series of alternative ranges of activity, rather than as certain volumes of production. This type of budget starts from the premise that the behavior of both fixed and variable costs depends, fundamentally, on the range of activity, so the volume of the budget corresponding to the levels of activity may vary more, or in its case less, than proportionally with said levels.
This type of budget has several meanings, such as:
a) It is linked to the variable cost budget in a management report.
Synthetically, it consists of quantifying the variable cost budget in absolute values (of a certain cost center and variable cost item) starting from the predetermined unit costs and multiplying them by the volume of activity of that cost center.
b) Flexible can be understood to the unit cost budget, since its value will depend on the volume for the apportionment of the fixed.
c) Another meaning may be that the budget (not only of costs and expenses) is feasible to modify with certain periodicity depending on changes in the context variables (prices, exchange rates, etc.). In other words, to carry out a true management control, the budget must be adjusted according to the changes in all the non-controllable variables for the sector that is being evaluated in its economic management. This type of budget is more feasible to use in companies such as those referenced above.
In the conditions of the Cuban economy, this process acquires a special connotation, since the tactical objectives and strategies of each area of responsibility are included in the framework of the development strategy of the entire society, this being the form of development. of the social system, hence that planning finds its most adequate space within the improvement process, in which Cuban companies find themselves.
Currently, there are some trends that indicate the interrelation that must exist between management models and those that guarantee the fulfillment of their functions.
Activity Based Budgeting (ABB) is the adaptation of the ABC and ABM (Activity Based Management) philosophy to the budget formulation process. The ABB aims to focus the budget on activities. 16
1.2. Activity Based Budgeting (ABB).
The ABB estimates the resources to be used taking into account the output to be obtained and the factors that cause costs (inducers) of the activities to be carried out.
Activity-based budgeting is the budgeting system in which, based on sales forecasts and cost drivers, the activities to be carried out and their corresponding costs are estimated.
The unstoppable increase in the weight of public activity, demanded by the increasing complexity and interaction of national and international economies, favors the rupture of the narrow framework of the traditional budget. Thus, it is based on a conception of public activity that is much more committed to the development of the national economy. In this way, the Activity-Based Budget makes its appearance.17
This, better known by its name in English, Activity Based Planning, is a working method, which, based on the evolution of the ABC / M model (activity-based administration), seeks to generate information that integrates the planning processes strategic and budgeting in an activity-based scheme to manage with a broader spectrum.
It is one more way to budget or plan a period in the entity. Activity-based budgeting is the adaptation of the Activity-Based Cost (ABC) and Activity-Based Cost (ABM) philosophy to the budget formulation process. The ABB aims to focus the budget on activities, since these are the cost generators and the resources to be used are estimated taking into account the output to be obtained and the factors that cause the costs of the activities to be carried out.18
The extension of the principles of the ABC system to the budget area is what is called in Anglo-Saxon language the Activity Based Budget (ABB), through which the cost estimates linked to the activities that must be undertaken to produce and sell the products are established and services; therefore, the Activity Based Budget constitutes a logical methodological progression from ABC.
With the ABB, the resources of the activities to be developed are estimated taking into account the outputs that are desired and the factors that cause the costs (inductors). 19
In this regard, Amat, O (2000) defines it as: budgeting system in which, based on sales provisions and cost drivers, the activities to be carried out and their corresponding costs are estimated.20
In general terms, the author considers that budgets, regardless of their nature, have common features and particularities that differentiate them.
Among the first, the following stand out: they constitute a technique for planning, for this reason, they make plans and express in monetary terms the resources necessary to achieve the objectives proposed by the entity; they serve as a management tool for managers.
The differences between one and other types or classes of budgets are given by the period they cover, in correspondence with the level of activity, according to the way of planning (by area, by cost or activity center, by activities), etc.
Activity budgets, as the name implies, come from the cost under these conditions, but they differ substantially from previous forms of budgeting due to the degree of detail and their contribution to more efficient cost management with which the plans are prepared. under this philosophy.
The previous approach and the study carried out by the author to respond to the problem posed, allow her to conceptualize the term in the following way:
Activity-based budgeting constitutes a planning technology whose character can be declared for operational periods and / or strategic. It makes it possible to prepare the plans with a greater degree of detail. Part of the activity centers until reaching the activities, or smallest organizational segment object of the plan, whose objectives in an organization structured in processes correspond to the goal to be achieved by them. In general, the Activity-Based Budget (ABB) has become an instrument of Strategic Management Accounting.
The ABB is assisted by particular techniques that complete its systemic nature and make it possible to make cost projections based on the ABC paradigm; products consume activities and these resources.
As indicated previously, the activity-based budget is an adaptation of the activity-based cost (ABC) philosophy, so it is considered advisable to describe the elements that make up the aforementioned system.
1.3. Activity Based Cost.
In 1991, Brimson defined activity accounting as "the accumulation of information on operational and financial performance in relation to the significant activities of a company". In this first definition we observe that it develops logically around the central concept of activity.21
A year later the Institute of Management Accountants (IMA) defines the ABC system as: «a concept of cost accounting based on the fact that the products and services offered by an organization require the organization to carry out activities and that these activities lead to the organization incurs costs. In the ABC, any cost that cannot be directly assigned to a product or a service is transferred to the activities that make this cost necessary. The costs accumulated in each activity are then transferred to other activities, products or services that make that activity necessary »22. This definition already includes the two key ideas of the system, the first one referring to the fact that activities consume resources and the second one that considers that products are the ones that consume activities.
The authors, Mallo, Mir, and others (1994) in a first definition of ABC describe this model in the following way: “The ABC system is a new cost model that, like the previous ones, aims to assign direct costs and distribute costs indirect on the cost of products.23
This definition is clearly supported by full costing, although it is not too representative of the ABC system fund. Instead, explicitly, the same authors consider ABC, in a second definition much more complete than the previous one, as a direct cost system. This definition, more complete than the previous one, is: «The ABC model, for us, is a direct cost system, which can be used with real or standard variables, which calculates and estimates the costs of production and marketing of products and services, integrating the short and long term perspective, seeking relevant information on the managerial use of costs to find the best adaptation of the company to its market, analyzing the formation of the value chain through the specification and grouping of activities,whose associated costs are transferred to the cost of products and services based on the causal relationship of economic transformation by the appropriate transmission costs »24.
R. Cooper and R. Kaplan (1999) affirm that the ABC model "is an economic map of the costs and profitability of the organization based on activities" 25. This definition, even being the shortest of all the previous ones, faithfully summarizes the foundation of the system.
Without wishing to expose in this section all the definitions that have been formulated on the ABC system by different authors, although having already studied a good number of them to perceive and understand the basic background of the system, the ABC conceptual base will be developed below through the study of the characteristics of the model, activities, etc.
Now, it can be added that the ABC, ABB system, in all the previous conceptions, that can be designed and implemented in one company will probably not coincide with that applied in another company, even if they belong to the same sector or have similar operating structures, nor in Regarding the list of activities identified and analyzed, nor regarding the level of detail or aggregation used for their development.
The ABC, ABB model means budgeting, analysis and cost calculation based on the activities that take place in the company and, therefore, in a different way from that used by traditional cost systems. Activity-based cost systems focus precisely on the activities required for the production of each product, or batch of products or for the provision of each service, and are based on the consumption of resources or cost factors that each one of them.
It can be said that this system arises as a replica of full costing and direct costing since both methods deal with the cost of the product and not its components. Instead, the ABC is based on identifying the costs of the different components, and for this it is responsible for: x "Identifying the resources that are used in the management of each activity x Quantifying the cost of the resources used in the management of each activity x Determine what activities are necessary for the product ”26.
Therefore, what is important is not the cost of the product itself, but the cost of the activities that make it up. To achieve this, this system is based on the following two key ideas:
1. Products consume the activities necessary for their manufacture, not costs or resources. In other words, the activities are provoked and consumed by the different productions.
2. Activities consume resources or productive factors. That is, it is the activities and not the products that consume cost factors.
Since the activities constitute the center of analysis and study of the cost system based on the activities, the concept and some different classifications that have been proposed for them are described below.
1.4. Concept and Classification of Activities.
Initially, the ABC model was presented with a poorly defined idea of business activities, although sufficiently related to the strategic thinking of M. Porter and to the approaches of J. Miller and T. Vollmann. Today we can say that the concept of activity has been defined by many authors.
The definition proposed by Brimson in 1991, from which the two fundamental axes of the ABC system could be extracted, is the one that considers that “activities are processes that consume substantial resources to produce an output. An activity describes how a company uses its time and resources to achieve corporate objectives ”27.
Both this definition and the following emphasize the idea of resource consumption of activities. The IMA defined and classified, in 1993, the concept of activities as follows: «processes or procedures that require a particular job necessary for the organization. A unit of work that takes place within the organization and consumes resources. Activities can be classified into five types: business and organization support activities, process support activities, process activities, customer or market related activities, and product or product line related activities »28.
Classification of activities
There are many classifications that could be presented of the activities since they can be divided taking into consideration different questions or aspects29.
Classification based on performance with respect to the product
This classification was proposed by Cooper and Kaplan (1991) 30, it can be said that it has been the most successful. It is, according to them, a "hierarchy" of activities that allows understanding the behavior of costs incurred by the company. It distinguishes four levels that can be easily found in practice. This classification takes into account the performance of the activities with respect to the product:
1. Main activities: they are those that contribute directly to the achievement of the output to be commercialized by the company and their costs are passed on to the cost of the products through the so-called cost generators or cost drivers. In turn, they can also be classified into:
x Activities at the unit level: they are executed every time a unit of product is produced and consume a fairly similar amount of resources in all of them. They consume resources directly related to the number of units produced. (For example, packaging product, cutting pieces, assembling product, fixing room, etc.).
x Activities at the batch level: they are carried out every time a batch or set of units of a given product is manufactured. The resources they consume vary depending on the number of batches processed, although they must be independent of the number of products that make up each batch.
(For example, packaging batches of products, tuning machinery, inspecting batches, moving and treating materials or products, etc.).
x Activities at the production line or product support level are carried out to enable the correct operation and maintenance of each line of the production process. The costs they consume are independent of both the units produced and the batches processed, but are more related to product or process modifications or engineering changes for a new design.
2. Secondary activities: they are those that support the main activities and their costs are treated as costs of the period:
x Activities at the factory or plant or company maintenance level: these are activities carried out to maintain the general production capacity of a manufacturing plant. It can be said that they act as support or general sustenance of the organization. They are common to all products, that is, to the entire production process without being directly involved in it. Their costs are normally not apportioned because they are usually at a level far from individual products. (For example, managing or directing the company, lighting and heating the company, monitoring the company, etc.).
Before moving on to the next classification, we must start from the considerations addressed by M. Porter on the value chain.
The appearance of the ABC model presents a close connection with Porter's strategic thinking published in his 1985 work31. In it he exposed his systemic vision of the company based on the concept of the value chain. For the author, the company can be defined in a very simple way: it is a set of activities. This set configures the competitive personality of a company and must be analyzed, according to Porter, within an environment that he described through a second idea, the value system.
The author positions himself in favor of the analysis of the company based on activities and the concept of value, instead of the traditional analyzes focused on factors and their added value. It also contrasts the concept of value with the concept of cost as a preferable tool in the analysis of competitive advantages. Under these arguments, the concept of value chain by M. Porter represents, according to some authors, a qualitative advance compared to the use of the traditional concept of added value.
The second classification addresses the activity's ability to add value to the product. This classification, along with the first, are those that are most in line with the ABC philosophy, since it seeks the elimination of everything that does not add value or is superfluous and also because it links the ABC system again with M's strategic thinking Porter. The meaning given to the term added value should be clarified here. It refers, on the one hand, to the perspective of the client in that its realization implies an increase in the client's interest in the company's product or service or, on the other hand, to the need to carry out these activities in order to obtain the product32: Classification based on added value
x Activities that add value: those that are strictly necessary to obtain the product or those that increase the customer's interest in it. (For example, issuing a purchase order, serving an order to the customer, cutting raw materials, painting a product well, etc.), x Activities that do not add value: they are those that do not influence the customer in his appreciation of the product or those whose removal does not entail any problem in obtaining the product. (For example, quality control, redo a defective product, the movement of materials through plants, the storage of finished products, etc.).
This is not the only classification of activities that Porter performs. Next, the second proposal of division of activities into direct, indirect and guarantee applicable to both main activities and support activities is studied, the content of which recalls the traditional distinction of main and auxiliary centers. However, the author does not compare these activities with respect to the object of cost or product but with the client's consideration of the value of the activity.
This classification of activities is compatible with the first (main and support). Activities that can be called indirect «represent a good portion of costs, which are rapidly growing and can play an important role in differentiation through their effect on direct activities.
Despite this, indirect activities are often mixed with direct activities when managers examine the company, even though the two classes have different economies. They often interact (more maintenance costs mean lower machine costs). Other times these indirect activities are grouped into accounts called "miscellaneous" or "overhead", obscuring their cost and contribution to the differentiating strategy ”33.
1.5. The Cost Generators or Cost Drivers.
The ABC / ABB system aims to eliminate the subjectivity of the processes for assigning indirect loads. By means of the relationship between activities and products, such subjectivity can be largely eliminated, but for this it is necessary to define appropriate control and measurement units to establish that relationship between activities and products.
Those control and measurement units to which we refer receive different names such as cost drivers, cost generators or cost drivers, among others, and refer to the factors that, in each activity, cause, generate or induce cost. They are directly linked to each activity.
They establish very exact causal relationships between products and the consumption of activities.
The concept of cost drivers has not been well defined among the different authors. As we already pointed out this term “it has received various names in the still scarce bibliography in Spanish: cost vectors, cost inductors, cost generators, work units» 34.
J. Brimson35 defines the cost driver as "a factor that creates or influences the cost of an activity, in such a way as to identify the cause of said cost", "factor whose occurrence gives rise to a cost".
All the concepts referring to the budgeting process and costing per activity necessary for the understanding of the work have been taken up, but the application of these new management accounting systems is not enough, in the new paradigms, companies will have a horizontal orientation in By virtue of which, the emphases will focus not only on management, but also on performance control and evaluation.
1.6. Performance evaluation.
From what has been stated so far, it can be inferred that all companies, regardless of size or structure, have an interest in evaluating their performance, hence it can be argued that performance evaluation constitutes the process by which the overall performance of the employee is estimated. Most employees seek feedback on how they carry out their activities, and individuals charged with directing other employees must evaluate individual performance to decide what actions to take.
Budgeting and cost for decentralized organizations are developed by responsibility center.
A center of responsibility is a unit in which the manager has the responsibility and authority to make the decisions of that unit.36
A cost center is a segment of a decentralized organization that has been assigned (delegated) control over the incurrence of costs.37
A profit center is a segment of a decentralized organization whose control has been assigned (delegated) over the generation of income and the incurrence of costs.38
An investment center is a segment of a decentralized organization that has been assigned (delegated) to control the generation of income, the incurrence of costs, and the acquisition of the assets of the investment center.39
For such purposes, the responsibility centers are not only cost centers, but there are others that are evaluated considering other variables, that is, the performance in a cost center is evaluated based only on the variable controllable costs, however, in A profit center also includes the variable controllable income and in an investment center, the variable related to the efficiency of controllable assets is added to the previous ones.
It is important to point out in some classifications of costs and expenses related to the concepts previously handled.
It is well known that there are different costs for different purposes and although there are many classifications made by various authors, all agree that from the point of view of planning and control these can be:
x Historical: They are those costs that have been obtained within the period in the manufacture of a product or provision of a service and that are obtained at the end of the period, are kept for perspective analysis and comparison with future results, serving as a data historically based and always refer to the actual costs either by products, by areas of responsibility or expense account.
x Default: They are those calculated prior to the manufacture of a product or the provision of a service and are made taking into account the specific real conditions of the entity and immediate prospects for future and specific changes, that is, based on reality objective of each center.
x Standards: The standard cost is a predetermined cost that is calculated before the production has been executed and that is done on more technical bases, in its calculations, being more exact than the estimated costs.
x Controllable: Controllable costs are all those that are capable of being regulated, controlled at a given level of production and of applying corrective action in the event of a deviation being detected by an administrative authority, being able to identify directly with a level of authority or group of workers.
x Non-controllable: Costs that are not directly regulated by a certain level of management authority.
What is the relationship between accounting by areas of responsibility and the budgeting and cost process ?: The process is always prepared by areas of responsibility, be it for sales, personnel, costs and expenses, finances, etc. Each Cost Center or Income Center is an area of responsibility, but the reverse is not the case, that is, there are areas of responsibility that are not common Cost Centers but groups of Cost Centers. Such would be the case of a set of Cost Centers that recast in the total of a department or that the departments recast in the total of a management. The departments and the managers would be in this case areas of responsibility, although not Cost Center, which does not exclude that the manager has a Cost Center for her own expenses.Cost center is understood as a sub-account that concentrates expenditures linked to a set of homogeneous activities, which are carried out in a certain geographical area and which are under the responsibility of a single person. Clearly these features admit exceptions. The more the Cost Centers are opened the more apportionment of common expenses will have to be made.
All evaluation is a process to stimulate or judge the value, excellence, qualities of any person.
The fundamental objectives of performance evaluation are:
1. Allow conditions for measuring human potential in the sense of determining its full application.
2. Allow the treatment of human resources as a basic resource of the company and whose productivity can be developed indefinitely, depending on the form of administration.
3. Give opportunities for growth and conditions of effective participation to all members of the organization, taking into account, on the one hand, business objectives and, on the other, individual objectives.
The benefits of Performance Evaluation are:
For the Headquarters:
1. Better evaluates the performance and behavior of subordinates based on the variables and evaluation factors, through a system that avoids subjectivity;
2. Identify the training needs of your staff.
3. It allows her to propose measures and dispositions oriented to improve the behavior pattern of her subordinates;
4. Allows communication with subordinates to make them understand the mechanics of performance evaluation.
For the Subordinate
1. Know the behavioral and performance aspects that the company values most in its workers.
2. Know what your management's expectations are about their performance and their strengths and weaknesses.
3. You know what steps the boss is taking in order to improve his performance.
4. Acquire conditions for self-evaluation and self-criticism for their self-development and self-control.
For the company
1. You are in a position to assess your human potential in the short, medium and long term and define the contribution of each employee.
2. You can identify the employees who need change and / or improvement in certain areas of activity and select the employees who have promotion or transfer conditions.
3. You can give more dynamics to your human resources policy, offering opportunities to employees, stimulating productivity and improving human relations at work.
Methods for performance evaluation.
The performance evaluation system facilitates decision-making, not only administrative that affect workers, but also focused on progress and organizational research. It is a series of techniques that help to evaluate how the personnel put into practice the knowledge, acquired experiences, as well as the management of formal and non-formal interpersonal relationships in the workplace.
These effective performance evaluation systems can be applied through:
x Task-oriented techniques x People-oriented techniques x Feedback systems x Performance improvement systems
An organization cannot adopt any performance evaluation system. The system must be valid and reliable, effective and accepted. The approach should identify the elements related to performance, measure them and provide feedback to employees and the personnel department.
CHAPTER II. PROCEDURE FOR THE EVALUATION OF THE PERFORMANCE OF THE ORGANIZATIONAL STRUCTURES IN THE TRYP CAYO COCO HOTEL.
In this chapter, the design of the procedure is carried out as an instrument to carry out performance evaluation by activity in a hotel facility.
The results of the investigation were validated at the Tryp Cayo Coco Hotel belonging to the CUBANACAN SA Group, therefore the characterization of this facility together with the calculation procedure lay the foundations for the work.
2.1. Characterization of the Tryp Cayo Coco Hotel.
Cayo Coco is located in the northern keys of the Ciego de Ávila province, in the central region of Cuba. This islet is located in front of the old channel of the Bahamas and protected by the second largest coral reef in the world. It is joined to the Island of Cuba by means of a 17 km long jetty, built on the shallow sea of the Bay of Dogs.
Its 370 km of surface and its 21 km of virgin beaches make it the fourth largest island in the Cuban Archipelago and one of the most beautiful in this northern cays known as Jardines del Rey.
The Jardines del Rey tourist complex represents a pole with great prospects for its exuberant nature and the beauty of its beaches.
Internationally commercialized the enclave, it has nine hotels and three villas, which together provide some 3,600 rooms. It is considered the third tourist pole in Cuba and is one of the most unique for its natural comfort. Among those that stand out the flora and fauna with more than 150 endemic species. The highest sand dunes in Cuba and its famous coral reefs are a permanent attraction for those who choose the destination Jardines del Rey in their travel forecasts.
The Tryp Cayo Coco Hotel is located in Playa Larga, in the north end of the Cayo Coco Island. It provides services of a hotel with a four-star All Inclusive category. The facility covers an area of 20.6 hectares.
Located between a natural lagoon and an extensive and beautiful strip of beach, it is ideal for families, lovers of diving, fishing and various other activities.
The Hotel Tryp Cayo Coco limits to the north with Playa Larga and to the south with a forest area. It has land access through a stone road over the sea (pedraplén) of 17 km Ciego de Ávila-Cayo Coco and Cayo Coco-Cayo Guillermo at a distance of 40 km, and air through the Jardines del Rey International Airport, in Cayo Coco.
The installation became independent in 2003, as property is a 50% mixed capital company in which CUBANACAN participates on the one hand with its company CUBANACAN Mixed Companies and on the other hand the company ELASTIGMANAGEMENT BV based in the Netherlands. The union of the two parts forms the SOCIEDAD PARAISO CAYO COCO based in Havana and owner of the Hotel Tryp Cayo Coco.
The hotel has international marketing as its fundamental activity, and its mission is to become different due to the quality of the services, to turn the place into a paradise where reality and fantasy combine, creating an environment of full satisfaction that makes them favorites..
This mission that the installation proposes will enforce in a social order for what it was built: Excellence and love in services, taking care of a good maintenance of the facilities that promote full customer satisfaction and see this commitment to the economic prosperity of the area and the country.
The highest decision-making body comes from the General Director, the Resident Director and eight first-level managers who specifically attend to the different spheres of activity.
The facility consists of 502 standard rooms, two suites. They have a complete private bathroom, air conditioning, satellite television, direct telephone, mini bar, hairdryer and safe.
In the gastronomic services it has a Buffet restaurant, a restaurant specialized in seafood and fish, one for Cuban food, one for Italian food and one for international food. It has three barbecues that provide barbecue and fish services.
As for bars, it has a Lobby Bar, an aqua bar, a disco, two beach bars, a Snack Bar, which provides services 24 hours. Two swimming pools with children's areas. It has a Mini Club service.
In addition to these services, the hotel has a shopping arcade, sauna, gym, beauty salon and hairdresser. Car and motorcycle rental, taxi services. Communication with the world through the Internet Cafe with 24-hour Internet services. Tourism bureau, 24-hour medical service, beach volleyball, tennis court, basketball and squach. It has a nautical club, which offers sailing services, nautical sky, snorkelling, catamaran rides, nautical excursions to the coral reef.
The value of the capital contributed for the hotel investment was US $ 33,430,000.
The management of the hotel is developed under the concept of a budget of income and Expenses and Cash Flows whose main objective is to obtain benefits based fundamentally on the commercialization of the product in international markets.
The administration contract signed with the Sol Meliá Group in Cuba, bases its principles of records and charts of accounts for the European Economic Community.
The presentation of the Financial Statements and Balances conform perfectly to the formats Accepted by the Uniform Accounting System and also respond to the provisions of the Cuban Standards.
The accounting system is supported by an automated hotel management system, INTERHOTEL, which processes and generates all the economic and statistical information.
Parallel to this base system, the reporting system works that satisfies the demand for information consolidation in the formats established by the manager called SIEM-PRE, which enables:
x The generation of information on Income Statements or Operating Statements (Statements of Income and Expenses), as well as the Balance Sheet) State of Verification of Real Accounts), through the SIEM option.
x The data processing to obtain the budgets and projections of results through the use of the PRE option.
Between both systems there is an interface that enables the conversion by means of a link of accounts of the information contained in the INTERHOTEL system database and the database of the operating chain management system, being summarized by generating reports that satisfy the information needs of this.
In general, the hotel is a facility with a management on the rise, which fulfills its mission, and which has entered the international market with great acceptance.
2.2. Design of the Methodological Procedure to evaluate the performance by area of responsibility in the Hotel Tryp Cayo Coco.
A procedure constitutes a sequence of steps with a final objective, in this case the methodological character is attributed to the set of management techniques and methods that allow the achievement of the objective.
The designed Methodological Procedure aims to evaluate performance by areas of responsibility at the Tryp Cayo Coco Hotel in the Jardines del Rey tourist destination and is made up of four steps, as can be seen in figure 1.
The classification and grouping of activities, the selection of cost drivers associated with each activity and the budget by activity, which were taken from the studies carried out by Rendón, Y. (2010) were a valuable contribution to the completion of this work.) and Valdez, D. (2010).
This methodological procedure responds to the following principles:
1. The hotel is structured in areas where processes are developed that were considered activities.
2. Each area has a person in charge.
3. The areas are responsible for incurring only costs and expenses.
4. Each area operates on a cost budget.
In the Procedure the budgeting technique is inserted, the ABC costing methods are adapted, taking into account the traditional techniques, to evaluate performance the comparison method and the ex / post budget are used.
Figure 1. Procedure for evaluating performance by areas of responsibility at the Hotel Tryp Cayo Coco.
Each of the steps that make up the procedure, represented in the previous figure, is detailed below.
Step 1. Determination and classification of the areas:
According to the first principle that supports this procedure, the classification of the areas was carried out taking into account that they are grouped into activities and that the latter are classified into: main and support, in a similar way to that used in the process ABC costing, that is, it is about moving towards more advanced cost management systems, but taking into account the structure of the hotel facility, which is not susceptible of being modified by managers.
The success of the ABC depends to a large extent on the correct classification of the activities, with several that can be cited, since these are classified according to different aspects, in this case it was taken into account that the hotel groups its activities with a functional approach, the conditions in which this is carried out are in line with what Polimeni, R. (2004) proposed. 40
A combination of the functional approach with the grouping given by Porter, M (1985) and taken up by several authors such as Amat, O. and Soldevila, P. (1998), according to the functions of an organization, the following activities are included: x Investigation and development. x logistics and production. x Infrastructure. x Marketing.
x administration and management).41
The above activities are considered in the Tryp Hotel areas and classified into: main areas and support areas.
x Main areas: A hotel is basically a company that provides gastronomy and accommodation services and that develops leisure activities, such as recreation, all of which are included within the basic operations, therefore, in summary, the grouping of the following way:
Table 1. Grouping of the main areas.
Main areas: They
carry out the main functions Operations Accommodation
Food and beverages
Recreation / animation x Support areas: They are those that help or support the development of the main ones and also support each other. They are grouped according to functions in the way that appears in table 2.
Table 2. Grouping of support areas.
Support areas:
Insurance Those related to purchases and storage not only of materials but any other necessary resource for both main and support activities. Various services
Those related to technical, exterior, cleaning, laundry and communications services. Promotion and sales Those related to organizing advertising, conducting promotions, mediating with tour operators.
Hotel infrastructure Those related to general administration, finance and accounting, quality management, human resource management,
public relations, energy carriers Step 2. Determination of the rate / cost driver.
A cost inductor will be determined for each area, this will be representative as it is the cause of the cost generation in the reference area.
This is not limiting so that several areas can carry the same cost inductor. This occurs because these areas are interrelated with each other, based on the same purpose.
x Selection of inductors. The inductors were selected from a consultation work carried out with the specialists in the area of finance and accounting and managers of the facility.
x Determination of fees. The rate or index for each selected inductor in each area is calculated, obtaining the percentage that will be applied of the total value of the inductor, to the costs detected in the previous stage and they are assigned to the corresponding main activities. The rate is calculated as follows:
Where:
T - coefficient or distribution rate of the generator or cost inductor.
Ca- total costs of the activity.
I– inductor volume.
Step 3. Determination of the total cost of the main areas.
The total cost of each primary area will be made up of the own costs of each one of them plus the costs that have been assigned to each support area.
x Determine and assign the cost of the support areas to the main ones. The costs of the areas are identified taking into account the cost elements, that is, direct materials, direct labor and indirect costs; Knowing in this way the costs of all activities, both those that are assignable to the main and support areas. After calculating the rate, the allocation is made as follows:
Step 4. Performance evaluation.
x Budget / actual / stay comparison. In order to evaluate performance by area, the level of activity (number of stays) projected in the budget by area must be compared with the actual level achieved. If both levels of activity do not coincide, an ex / post budget will be made for the level of stays actually reached.
To carry out the Ex / post budget, the following steps must be followed:
Calculation of the budgeted unit cost for the actual level.
Where:
Cu: Budgeted unit cost (ex post)
CTp: Total budgeted cost
Er: Level of actual stays per season x Analyze actual performance / budget. A comparison will be made between actual and budgeted costs, showing possible variations, in order to evaluate performance by activity. In this part of the work it is important to highlight the need to show not only the favorable or unfavorable deviations, but to delve into the causes that generated them, since ultimately what is needed is to determine, in addition to the amount, who or who were those responsible for variations.
CHAPTER III. RESULTS OF THE APPLICATION OF THE METHODOLOGICAL PROCEDURE TO EVALUATE THE PERFORMANCE OF THE ORGANIZATIONAL STRUCTURES AT THE TRYP CAYO COCO HOTEL.
In this chapter the results achieved with the application of the Methodological Procedure to evaluate the performance in the Hotel Tryp Cayo Coco are exposed, for ethical reasons and at the request of the installation the information of a typical period is shown without framing it in date.
3.1. Analysis and discussion of results.
Costing process.
The starting point to carry out the costing was the ordering that the hotel has in processes, which were approved in previous works with activities, but for the purposes of the organization under study, according to what is stated in the previous Chapter, it is maintained a functional ordering by areas.
In order to calculate the cost of each area, it was essential to select the cost inductors, starting from considering that these are the cause that
generates the costs.
The classification of the areas for year X1 to which the cost was calculated was as follows:
Main Areas:
Accommodation
FUNCTION: OPERATIONS Food Drinks Support Areas
Technical Services
FUNCTION: MISCELLANEOUS SERVICES Security Services Foreign Services Cleaning Laundry Energy Dining Hall Employees Marketing FUNCTION: PROMOTION AND SALE General Administration FUNCTION: INFRASTRUCTURE
Determination of the costs of support activities.
The cost is calculated only for the areas that add value to the tourist product.
Technical Services
ELEMENTS X1 Labor $ 218´698.53 Other Costs 501´892.14 TOTAL COST $ 720´590.66
Security Services
ELEMENTS X1 Manpower $ 28´348.30 Other Costs 156´635.08 TOTAL COST $ 184´983.38
Employee Dining room
ELEMENTS X1 Cost of service provision $ 160´307.51 Manpower 161´057.77 Other Costs 8´576.12 TOTAL COST $ 229´941.40
Foreign Service
ELEMENTS X1 Personnel Cost (Gardening) $ 168´507.94 Personnel Cost (Pool and Beach) 33´274.19 Other Costs (Gardening) 172´451.32 Other Costs (Pool and Beach) 150´007.62 TOTAL COST $ 524´241.07
Laundry
ELEMENTS X1 Customer laundry $ 7 20.39 Labor 134'956.64 Other Costs 166'066.82 TOTAL COST $ 301'743.85 Cleaning
ELEMENTS X1 Labor $ 544'634.23 Other Costs 423'906.62 TOTAL COST $ 968'540.85 Los Selected cost inductors by activity are shown below:
Areas Cost inductors Employee canteen Direct salary Technical Services (ST) Direct salary Security Services Direct salary External Services Square meters Cleaning Square meters Laundry Quantity of pieces Energy Direct salary Marketing Total income Administration General Direct salary
The areas can be broken down into others of lower rank, if you want to work with a higher degree of precision.
The cost drivers shown above show that in some of them it is necessary to have more exact information on the cause of the cost, an example of which are the first three areas of support.
In the case of Energy, this is a lower-ranking area that encompasses that related to the consumption of water, fuel and electricity, so finding the right cost generator is difficult in these conditions, initially it is proposed to use the direct salary, for ease and homogeneity.
Determination and allocation of the rates of each cost generator.
Taking into account that several inductors have the direct salary as an allocation base, its calculation is necessary. It is valid to clarify that the personal salary of the personnel is comprised by the sum of the personnel salary of the 3 main activities (Accommodation Salary + Food Salary + Drink Salary).
ELEMENTS X1 Accommodation Salary $ 175´324.52 Food Salary 310´684.75 Beverage Salary 104´698.46 TOTAL COST $ 590´707.73 Technical Services Rate.
ST = Cost of the area / own salary of the staff
ST (X1) = $ 720 590.66 / $ 590707.73
ST (X1) = 1.2199
Security Services Rate
SS = Cost of the area / own salary of the
SS staff (X1) = $ 184983.38 / $ 590707.73
SS (X1) = 0. 3113
Energy Rate.
E = Cost of area / own staff salary
E (X1) = $ 1163628.33 / $ 590707.73
E (X1) = 1.9699
Employee Dining Rate
CE = Cost of area / own staff salary
CE (X1) = $ 229941.40 / $ 590707.73
CE (X1) = 0.3893
Foreign Service Rate
SE = Cost of the area / square meters
SE (X1) = $ 524241.07 / 20490 m2
SE (X1) = $ 25.59 m2
The total square meters taken as a base, are given by the sum of the square meters corresponding to each of the main activities, as shown below:
ELEMENTS Square Meters Accommodation 19´440 Food 450 Beverage 600 TOTAL 20´490 m2 Cleaning Fee
L = Cost of the area / square meters
L (X1) = $ 968540.85 / 20490 m2
L (X1) = $ 47.27 m2
Laundry Rate
LA = Cost of the area / Amount of pieces.
LA (X1) = $ 301 743.85 / 194352 pieces
LA (X1) = $ 1.55 / pieces.
The number of pieces that was taken as a base are given by the sum of the number of pieces of the main activities (Accommodation, Food, Drink), as shown below:
ELEMENTS Number of Pieces Accommodation 145´764 Food 38´870 Drink 9´718 TOTAL 194´352
Allocation of the cost of the Main Support Areas.
Following the same logical sequence, the allocation of the costs of the support area, LAUNDRY to the main Food, Beverage and Accommodation will be exposed. The primary information for the costing process is found in the Exploitation Balances by Departments.
ELEMENTS X1 FOOD 38´870 x 1.55 Laundry
Cargo $ 60´248.50
ELEMENTS X1 BEVERAGE 9718 x 1.55 Laundry
Cargo $ 15´062.90
ELEMENTS X1 ACCOMMODATION 154764 x 1.55 Laundry
Cargo $ 225´934.20
For the determination of the cost of the main areas, work will be done only with the accommodation area in order to corroborate the feasibility of the procedure, since for the rest of the areas it is possible to proceed in the same way.
Determination of the total cost of the Accommodation Area.
To determine the total cost of the main areas, it is necessary to make all the charges for the support areas, avoiding considering the cost of the hotel product for the period.
Accommodation Area
AREAS OF LOWER RANK YEAR X1 ANIMATION $ 534´690.45 RECEPTION 190´911.13 TELEPHONE SERVICES 124´917.79 SUPPORT AREAS CLEANING $ 918´928.80 EXTERNAL SERVICES 497´469.60 SECURITY TED8788.68 253.84 LAUNDRY 225´934.20 ENERGY 345´371.77 TOTAL COST $ 3´175´267.60
The previous results show the Total Cost of the Accommodation Area for year X1, which was $ 3 175 267.60, the budgeted cost of this area was $ 2 084 736.0, (see Annex 3) for 294 884 (see Annex 2) stays, here it is necessary to consider that there is a favorable deviation from the volume of tourists who arrived at the hotel, but that it will generate other analyzes and techniques to measure performance.
It can be seen that the cost of the laundry support area is the one that has the greatest weight in the total cost, representing 29% of it, and the one with the least weight is that of the security support area, which represents 1.7%. The total cost of the hotel product will be determined by adding the cost of the three main activities.
The total cost per stay was calculated for the accommodation area and can be seen in Annex 1.
Performance evaluation
Although the Operations Budget is shown for the year with all areas, for the purposes of performance evaluation, work continued only with the accommodation area.
When comparing the levels of stays actually reached in X1 (302 393) with the total of projected stays (286 488), it can be inferred that the comparison is not possible, since the budget was prepared for that number of projected stays, which which limits the performance evaluation, since the activity levels do not coincide, so it is necessary to prepare an Ex / post budget. The data for carrying it out (see annexes 1 and
2).
To carry out the same, it was necessary to estimate the costs, using the high-low-point method, used for its ease, leaving the equation as follows.
Y = $ 42´033.02 + 8,21726x
EXPOST BUDGET
Tryp Cayo coco Hotel
Year X1
Seasons / Month Stays Total Budgeted Cost High 109140 $ 817´947.66 November 22076 217´058.11 December 24628 232´911.13 January 32812 104´032.14 February 29624 263´946.28 Average 104354 $ 969´177.43 March 32015 278´799.18 April 29891 265´604.89 May 20764 208´907.96 June 21684 215´865.40 Low 85994 $ 860´094.72 July 26520 244´664.24 August 27110 248´329.32 September 16048 179´612.17 Once the ex / post budget has been prepared, it is compared with the actual cost.
The total cost of the accommodation activity has an unfavorable variation of $ 528´047, 79, generally having this behavior, despite the fact that the months of September and October behaved favorably, these were not enough to offset the final result, reason why it would be necessary to carry out analyzes with the person in charge of the area to determine the causes that caused this situation, that is, favorable volume of tickets and high costs
CONCLUSIONS
1. The Methodological Procedure for evaluating performance by area of responsibility in the Hotel Tryp Cayo coco, successfully combined Management Accounting with the ABC costing method, making it possible to determine those areas that have favorable behaviors and those that perform unfavorably.
2. In the particular case of the accommodation area, it can be pointed out that its behavior is very unfavorable, the number of tourists staying there increases, and the costs rise disproportionately.
3. The classification of the main and support areas was based on the entire theoretical arsenal that underpins Activity Based Costing, adapting it to the particularities of the Tryp Cayo Coco Hotel.
4. The preparation of the budget after the actual execution (Ex / Pos budget) is a tool that allows calculating the budget, taking into account the deviations of the actual amounts from the budgeted ones, which is essential to apply the method of The comparison in the analysis and evaluation, in the case of the Hotel Tryp, was feasible to use it to evaluate the performance of the areas.
5. The designed tool was valid and feasible to apply at the Tryp Cayo Coco hotel to control costs, constituting valuable information to make adjustments and make decisions.
RECOMMENDATIONS
1. Deepen the classification of activities to define more accurately those that add value to the product and be able to include them in the calculation of its cost.
2. Assess other inductors that could more clearly represent the cause of cost in the activities, such as the number of diners in the employee dining room activity and the number of services provided in the technical services activity., To increase accuracy in the costing, 3. Study the mechanisms for separating energy in greater detail, getting to know how much corresponds to water, fuel and electricity.
BIBLIOGRAPHY
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September 1994. Photocopied article. Page 31.
2. Amat, O. and Soldevila, P. (1998): Accounting and cost management, 2nd Edition.
Ediciones Gestión, Barcelona, Spain. Pp. 133-151.
3. Amat, O. and Col. (2000): Cost Management Accounting, 3rd edition. Ediciones Gestión, Barcelona, Spain. Pages 177, 181, 191.
4. Blanco Ibarra, F. (1998): Cost accounting and management analytics for strategic decisions. Deusto editions, Bilbao, Spain. P. 219.
5. Brimson, J. (1991), Activity accounting: An activity - based - costing approach, John Wiley and Sons, New York, Page. 47, 247, 251.
6. Castelló, E. and Lizcano, J. (1994), ob. cit., pp. 96 to 105.
7. Cooper, R. and Kaplan, R. (1991): "Profit priorities from Activity Based Costing", Harvard Business Review, pp. 130 and 131.
8. Cooper, R. and Kaplan, R. (1999): Cost and effect. Ed. Gestión 2000, 2nd ed. Barcelona, translation of the work of the same authors Kaplan, R. and Cooper, R. (1998): Cost and effect, Harvard Business Schoool Press Boston, Massachusetts, p. 101.
9. González, Jordán, Benjamín (1999): Introduction to Business Financial Decisions, Part I. Page 110.
10. IMA (Institute of Management Accountants) (1993): Practices and Techniques: Implementing Activity- Based Costing. Statement on Management Accounting. Statement No. 4T, September 30.
11. Johnson, HT and Kaplan, RS (1987). Relevance lost: The Rice and fall of management Accounting. Boston, Harvard Business Scholl Press. Page 25.
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13. Mallo Rodríguez, C. (1988): Cost Accounting and Management. Part 1 Ed. Pyramid. SA. Madrid. Page 52.
14. Mallo Rodríguez, C. (1991): Analytical Accounting, Cotes, Yields, Prices and Results. Edited by the Institute of Accounting and Accounts Auditing. Madrid. Spain. Page 173.
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17. Polimeni, R. (2014): Cost accounting. Concepts and applications for managerial decision making. Ed. Mc Graw Hill. Mexico. P. 45.
18. Porter, M. (1985): Competitive advantage. Setting and sustaining superior performance. The Free Press, New York. I have used the Spanish translation of Campa de la Pérez, M. Asunción (1988): Competitive Advantage, Compañía Editorial Continental, México, 2ª impr. Pages 52, 61.
19. Ramírez Padilla, DN (1991): Administrative Accounting. Editora Mc Graw Hill. Mexico. P. 37.
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21. Rocafort Nicolau, A. (1997): The ABC cost model (Activity Based Costing) and its adaptation to the needs of internal information in current organizations. Research work. University of Barcelona, Barcelona, Page 83.
22. Sáez Torrecilla, A. and Col. (2000): Cost Accounting and Management Accounting, Spain, Pages 9-12, 35, 191-192.
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26. “Jardines del Rey, the Tourist Pole of Greater Growth”, Available on the Internet: <http://www.juventudrebelde.cu/cuba/2013-11-14/jardines-del-rey-elpolo-turistico-de- higher-growth />,.
27. “Jardines del Rey”, Available on the Internet: <http://www.cubatravel.cu/es/destinos-turisticos/jardines-del-rey>,.
1 "Cuban Tourism, the most dynamic sector of the national economy", Available on the Internet: <http://www.cubadebate.cu/noticias/2016/02/02/el-turismo-cubano-el-sector-mas -dynamic-of-the-national-economy / #. V2rkABUVi1>,.
2 Ibid
3 "Economy", Available on the Internet: <http://mipais.cuba.cu/economia.php?ids=68>,.
4 “Jardines del Rey, the Tourist Pole of Greater Growth”, Available on the Internet: <http://www.juventudrebelde.cu/cuba/2013-11-14/jardines-del-rey-el-polo-turistico-de -greater-growth />,.
5 “Jardines del Rey”, Available on the Internet: <http://www.cubatravel.cu/es/destinos-turisticos/jardines-del-rey>,.
6 Tablada Pérez, C. (1987): Economic Thought by Ernesto Che Guevara, Volume I, Writings and Discourses, Ed. Casa de las Ameritas, p. 76.
7 Mallo Rodríguez, C. (1988): Cost Accounting and Management. Part 1 Ed. Pyramid. SA. Madrid. Page 52.
8 Sáez Torrecilla, A. and Col. (2000): Cost Accounting and Management Accounting, Spain, p. 9-12.
9 Johnson, HT and Kaplan, RS (1987). Relevance lost: The Rice and fall of management Accounting. Boston, Harvard Business Scholl Press. p.25.
10 Sáez Torrecilla, A. and Col. (2000): Cost Accounting and Management Accounting, Spain, p. 35.
11 Ripoll Feliz, V. (2000). Advanced Management Accounting. University of Valencia, Spain. P. 26.
12 Álvarez López, J. and Blanco Ibarra, F. (1994): Strategic management accounting as an essential instrument for improving competitiveness. September 1994. Photocopied article. P. 31.
13 González, Jordán, Benjamín (1999): Introduction to Business Financial Decisions, Part I. Page 110.
14 Mallo Rodríguez, C. (1991): Analytical Accounting, Cotes, Returns, Prices and Results. Edited by the Institute of Accounting and Accounts Auditing. Madrid. Spain. Page 173.
15 Ramírez Padilla, DN (1991): Administrative Accounting. Editora Mc Graw Hill. Mexico. Page 37.
16 Amat, O. and Col. (2000): Accounting for Cost Management, 3rd edition. Ediciones Gestión, Barcelona, Spain. Page 177.
17 Ibídem Mallo Rodríguez, C and Col. (1994).
18 Amat, O. and Col. (2000): Cost Management Accounting, 3rd edition. Ediciones Gestión, Barcelona, Spain. P. 181.
19 Kaplan, R and Col. (2000): Cost accounting and management strategy. Prentice Halla Iberia, Madrid. P. 500.
20 Amat, O. and Col. (2000): Cost Management Accounting, 3rd edition. Ediciones Gestión, Barcelona, Spain. P. 191.
21 Brimson, J. (1991), Activity accounting, John Wiley and Sons, New York, p. 247.
22 IMA (Institute of Management Accountants) (1993): Practices and Techniques: Implementing Activity-Based Costing. Statement on Management Accounting. Statement No. 4T, September 30.
23 Mallo Rodríguez, C and Col. (1994): Management accounting (internal accounting). Calculation, analysis and cost control. ACODI-Ariel Economy, Barcelona. P. 472.
24 Mallo Rodríguez, C., Mir, F., Requena, JM and Serra, V. (1994): Management accounting (internal accounting). Calculation, analysis and cost control. ACODI-Ariel Economy, Barcelona. P. 472.
25 Cooper, R. and Kaplan, R. (1999): Cost and effect. Ed. Gestión 2000, 2nd ed. Barcelona, translation of the work by the same authors Kaplan, R. and Cooper, R. (1998): Cost and effect, Harvard Business Schoool Press Boston, Massachusetts. Page 101.
26 Blanco Ibarra, F. (1998): Cost accounting and management analytics for strategic decisions. Deusto editions, Bilbao, Spain. P. 219.
27 Brimson, J. (1991), Activity accounting: An activity - based - costing approach, John Wiley and Sons, New York, p. 47
28 IMA (Institute of Management Accountants) (1993): Practices and Techniques: Implementing Activity- Based Costing. Statement on Management Accounting. Statement No. 4T, September 30.
29 Castelló, E. and Lizcano, J. (1994), ob. cit., pp. 96-105.
30 Cooper, R. and Kaplan, R. (1991): "Profit priorities from Activity Based Costing", Harvard Business Review, pp. 130 and 131.
31 Porter, M. (1985): Competitive advantage. Setting and sustaining superior performance. The Free Press, New York. I have used the Spanish translation of Campa de la Pérez, M. Asunción (1988): Competitive Advantage, Compañía Editorial Continental, México, 2ª impr. P. 52.
32 Sáez Torrecilla, A. and Col. (2000): Cost Accounting and Management Accounting, Spain, Pages 191 and 192.
33 Porter, M. (1985): Competitive advantage. Setting and sustaining superior performance. The Free Press, New York. I have used the Spanish translation of Campa de la Pérez, M. Asunción (1988): Competitive Advantage, Compañía Editorial Continental, México, 2ª impr. Page 61.
34 Rocafort Nicolau, A. (1997): The ABC (Activity Based Costing) cost model and its adaptation to the internal information needs of current organizations. Research work. University of Barcelona, Barcelona, p. 83.
35 Brimson, J. (1991), Activity accounting: An activity - based - costing approach, John Wiley and Sons, New York, p. 251.
36 Polimeni, R. and Col. (1989): Cost accounting. Translated from the 2nd Edition of Cost Accounting. Bogotá. Colombia. P. 740.
37 Polimeni, R. and Col. (1989): Cost accounting. Translated from the 2nd Edition of Cost Accounting. Bogotá. Colombia. Page 740.
38 Polimeni, R. and Col. (1989): Cost accounting. Translated from the 2nd Edition of Cost Accounting. Bogotá. Colombia. Page 740.
39 Polimeni, R. and Col. (1989): Cost accounting. Translated from the 2nd Edition of Cost Accounting. Bogotá. Colombia. Pages 757, 763 and 768.
40 Polimeni, R. Cost accounting. Concepts and applications for managerial decision making. Ed.
Mc Graw Hill. Mexico, 2014. P. 45.
41 Amat, O. and Soldevila, P., Accounting and cost management, 2nd Edition, Ediciones Gestión 2000, Spain, 1998, P. 133-151
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