Question

The following partial organization chart is an extension of Exhibit 12–1 for Aloha Hotels and Resorts. hapter 12 Responsibility Accounting, Quality Control, and Environmental Cost Management 535Waikiki Sands HotelGrounds andMaintenanceDepartmentFrontDeskHousekeeping andCustodialDepartmentFood andBeverageDepartmentHospitalityDepartmentBellStaffGuestServicesRecreationalServicesDepartment Each of the hotel’s five main departments is managed by a director (e.g., director of hospitality). The Front Desk subunit, which is supervised by the front desk manager, handles the hotel’s reserva-tions, room assignments, guest payments, and key control. The Bell Staff, managed by the bell captain, is responsible for greeting guests, front door service, assisting guests with their luggage, and deliver-ing room-service orders. The Guest Services subunit, supervised by the manager of Guest Services, is responsible for assisting guests with local transportation arrangements, advising guests on tourist attrac-tions, and such conveniences as valet and floral services. Required: As an outside consultant, write a memo to the hotel’s general manager suggesting a responsibility-center designation for each of the subunits shown in the organization chart above. Justify your choices.

Answer 1

Some responsibility centers are responsible only for costs. The hotels and resorts would be a good illustration. Other responsibility centers such as corporate departments are responsible for both revenues and costs. Finally, some responsibility centers are accountable for revenues, expenses, and investment in corporation assets. The chief executive officer is a prime illustration of this. The appointment of responsibility centers depends on the particular organizational arrangement and management arrangement in the organization.

Explanation:

The five types of responsibility centers are described as follows:

·      Cost center: A responsibility center, the manager of which is accountable for the subunit's costs. Hospitality department can be considered as cost center which includes front desk, bell staff and guest services.

·      Discretionary cost center: A responsibility center, the manager of which is held responsible for the subunit's costs, and in which there is not a well specified relationship between inputs and outputs. Recreational service center can be categories as discretionary cost center.

·      Revenue center: A responsibility center, the supervisor of which is liable for the subunit's revenue. The front desk can be considered as revenue canter as it handles room assignments, advertisements, guest payments, etc.

·      Profit center: A center, the manager of which is liable for the subunit's profit. Food and beverages department can be considering in profit center as it generates revenue for hotel and resorts.

·      Investment center: A responsibility center, the administrator of which is responsible for the subunit's earnings and the funds invested to create those earnings. Housekeeping and custodial Department will be considered as an investment center.

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