Question 1

The hotel and travel industry was devastated by the Covid-19 pandemic. The Singapore Tourism Board reported in April 2020 a near 100 per cent drop from the 1.6 million tourists the previous year (Straits Times, 4 June 2020). However, towards the end of 2020, lockdown measures will be relaxed in many countries as governments start to make reciprocal air-bubble travel arrangements and promote domestic staycation. The hotel industry must prepare itself for a gradual recovery. Keys to recovery in the hotel industry are:

-To execute stringent cost saving measures. This is an area in which management accounting can make important contributions.

-Prepare to welcome more leisure guests from the domestic market; and

-To build guests' confidence by addressing Covid viral concerns.

Required:

(a) Explain the term "costs" and differentiate costs from expenses. In the context of the hotel industry, give four (4) examples of costs.

(12 marks)

(b) Discuss why in the study of management accounting, so much attention is focused on costs and efficiency and how the understanding of costs can help the hotel industry.

(27 marks)

(c) Explain the meaning of cost objects. Give four (4) examples of cost objects from the hotel industry. Explain why managers might be interested in knowing the costs.

(21 marks)

(d) When analysing cost behaviour, discuss the meaning of "level of activity". Give four (4) examples of activity in the hotel industry.

(10 marks)