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Accounting for Decision Making Group Project Assessment As this is a group project, you may undertake the analysis in groups of up to 2 members. The material for this assessment is to evaluate three...

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Accounting for Decision Making

Group Project Assessment

As this is a group project, you may undertake the analysis in groups of up to 2 members.

The material for this assessment is to evaluate three separate parts/questions. You need to provide an answer to all three parts. In you submission you should include as an appendix the group’s solution to the questions, showing your contributions to the group work. In the main part of the submission you need to provide your own individual write-up, along with your conclusions and recommendations:

All parts come from questions in the textbook (Birt et al XXXXXXXXXXand have been modified slightly:

a) Question 9.45 on the Dorquay Hotel,

b) Question 2.57 on a proposal by a vendor, and

c) Question 10.32 on Chloe Enterprises considering next year’s budget

For your convenience, the questions are reproduced on the following pages with some modifications.

Please clearly show the members of the your group on your cover sheet.

Part a.

Question 9.45

The Dorquay Hotel has twenty rooms available for rent. During the month of December its average room rate is expected to be $180 and its room occupancy 90 per cent. Due to the holiday season in January, the room rate is to be increased by 10 per cent, and the occupancy is expected to be 95 per cent. In February, no further room rate increase is planned and occupancy is expected to be 85 per cent.

Required (group)

Calculate the budgeted room revenue for each of the three months (December, January & February).

Required (your individual response)

Discuss how the management of the Dorquay Hotel could have estimated the occupancy rate.

Part b.

Question 2.572

Erle Smith is the financial controller with Practical Solutions Ltd, an entity that sells software products to accounting firms and small businesses. Mr Smith is analysing a number of software packages that focus on budgeting. He needs to select a package he can recommend to his clients. Each software vendor is keen to have their software selected as it will result in a significant increase in sales for their company.

Anitah Loh is a salesperson for software company Dogto Ltd. She has asked Mr Smith to go to Los Angeles to analyse her company’s software package properly, and the programming experts there can give him a thorough demonstration. Ms Loh also suggested Mr Smith take his family, so he feels relaxed in a foreign country and can undertake his analysis without worrying about being away from his family. Dogto Ltd would pick up the expenses for the trip.

Required (your individual response)

1. Do you think Mr Smith should take the trip? Outline any ethical concerns involved.

2. What would be the advantages and disadvantages to Practical Solutions Ltd of having an employee code of conduct? What measures might be included in such a code of conduct?

Part c.

Question 10.32

Chloe Enterprises operates a single-product entity. Data relating to the product for 2015 were as follows.​

Annual volume

XXXXXXXXXXunits

Selling price per unit

$ 60

Variable manufacturing cost per unit

$ 28

Annual fixed manufacturing costs

$ XXXXXXXXXX

Variable marketing and distribution costs per unit

$ 12

Annual fixed non-manufacturing costs

$ XXXXXXXXXX

Required (group)

a.​Calculate the break-even in both dollars and units for 2015.

b.​Calculate the margin of safety in both units and sales dollars.

c.​Calculate the profit achieved in 2015 given the annual volume of XXXXXXXXXXunits..

d.​Changes in marketing strategy are planned for 2016. This would increase variable marketing and distribution costs by $4 per unit, and reduce fixed non-manufacturing costs by $80 000 per year.

Calculate the units that would need to be sold in 2016 to achieve the same profit as in 2015.

Required (your individual response)

a. Would you recommend the change proposed in d. above? Explain

Answered Same DayNov 12, 2019

Solution

David answered on Nov 30 2019
58 Votes
Solution:
Part A:
Occupancy Rate refers to the ratio of the room being rented out in proportion to the total room being available. It can be calculated using a simple formula:
Occupancy rate = Room on rent/ Total rooms
In the present case, the Dorquay Hotel estimated its occupancy rate based on seasonal changes. There are also various other means by which such occupancy rate can be estimated/ determined:
1. Market Scenario:
The occupancy rate depends on the economic and social factors. In areas with flourishing economy, it is expected that people will spend more on luxuries and travel. Social factors such as idea of savings affect the nature of spent.
Tourism industry is mainly focused with the movement of economy and thus this factor plays a major role in determination of occupancy rates for the hotels.
2. Peers occupancy:
The occupancy rates of peer competitive hotels are also to be checked and analyzed before deciding on to one’s own occupancy rates for the months. There might be a situation of conflict in terms of estimations among peers depending on various many advantages enjoyed by each of them.
However, such differences needs to analyze carefully and data of occupancy must be established based on careful syntheses of such data.
3. Past Experience:
Much crucial is the data of past occupancy being generated by the company’s based on their experiences during different parts of the month. The hotel needs to carve out its occupancy trends for the months and an average occupancy rate should be used to estimate its budgeted revenue.
4. Room Rate:
It plays a major role in deciding the turnout of the tourists and should be competitive enough to justify its occupancy.
Thus, the Dorquay Hotel should take these factors into consideration while deciding to its occupancy rate with more emphasis on deciding its room rate and competition in market.
Part B:
Solution 1:
The fundamental moral concerns are autonomy, trustworthiness and objectivity.
The realities appear to show that it is an all-cost paid outing to Los Angeles for Mr. Smith and his family. This could give the feeling...
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