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BIZ201_Assessment 4 Brief_M6_Case Study Page 1 of 19 ASSESSMENT BRIEF Subject Code and Title BIZ201 Accounting for Decision Making Assessment Case Study Part B Individual/Group Group (2-3 students)...

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BIZ201_Assessment 4 Brief_M6_Case Study Page 1 of 19

ASSESSMENT BRIEF
Subject Code and Title BIZ201 Accounting for Decision Making
Assessment Case Study Part B
Individual/Group Group (2-3 students)
Length 2,000 words
Learning Outcomes a) Explain and evaluate the role and importance of
financial information in business decision making
) Apply relevant accounting concepts to simple
usiness scenarios
d) Apply basic costing and budgeting techniques to
usiness decision making
e) Apply capital budgeting techniques to capital
investment scenarios
Submission By 11:55 pm AEST/AEDT Thursday of Module 6 (week 12)
Weighting 40%
Total Marks 100
Context:
This assessment is aimed at consolidating knowledge from Modules 1-6. By prescribing this
assessment, you are able to reflect on your understanding of the importance financial
information in business decision making and be able to apply costing and capital budgeting
techniques to business scenarios like given in this case study.
Instructions:
1. The facilitator will create a group of 2-3 students for this assessment. This assessment
should be prepared as a group. One submission per group will be allowed. The
members of the group need to be clearly stated in the Business Report.
2. Two files have to be submitted, the Excel Workbook (AU - Crystal Hotel Case Study
Workbook Part B student.xlsx) including calculations and the Business Report
summarising the tasks and recommendations. This workbook is attached under
Assessment Information Section. You can download and work on it. All the calculations
should be done in Excel and only the final tables should be included in the report.
3. You should include a reference list to any textbooks, websites or other resources used to
prepare the answers including references to suppliers that the costing was based on.
BIZ201_Assessment 4 Brief_M6_Case Study Page 2 of 19

4. For every task you are required to show all workings. The Excel Workbook should
include formulas whenever appropriate. Copy pasted numbers with no workings
provided are not acceptable.
5. Unless otherwise instructed, numerical answers should be rounded to 2 decimal places.
6. Submit your assessment files using the following naming convention:
First Name_Last Name_BIZ201_Case_Study B_ Group_Assessment4_Workbook.xlsx
First Name_Last Name_BIZ201_ Case_ Study B_Group_Assessment4_Report.doc
BIZ201_Assessment 4 Brief_M6_Case Study Page 3 of 19
Crystal Hotel Pty Ltd introduced in Part A of the Case Study has a quite flat organisational
structure as per the chart below. The General Manager oversees each departmental
manager directly.
You have been offered an internship opportunity as a group to show your skills and how you
could be of benefit to the organisation. At the end of the internship, there may be an
employment opportunity for the members of the group.
You need to choose as a group whether you would like to take on your internship in the
Sales and Marketing Department or Functions and Events Department.
Based on your choice, complete the section of the assessment related to the department
you have selected.
General
Manage
Rooms
Division
Human
Resources
Accounting
Sales and
Marketing
Functions
and Events
Food
&Beverage
Executive
Assistant
Manage
Crystal Hotel Case Study
BIZ201_Assessment 4 Brief_M6_Case Study Page 4 of 19
As per information provided in part A of the case study, the owners of the Crystal Hotel are
planning to renovate and refu
ish the hotel. A part of the redevelopment plan is to build a
Wellness Centre on the rooftop of the hotel. The Sales and Marketing Manager volunteered
to help with this project. He is a strong believer that it would
ing the hotel up to the next
level and also that it would attract additional customers to the hotel.
Due to the location of the hotel being within a close proximity to the business district of Pa
amatta, he believes that the Wellness Centre should be opened to external clients as well.
He suggests employing a full time, in-house trainer and a part-time dietician. He believes
selling monthly membership including training sessions and dietary advice will attract
additional clients who may then promote the hotel to their employers for accommodation
and other business related services.
The marketing manager wants to be well prepared to support the Wellness Centre project
and needs help with few tasks from your team.
TASK 1
As part of the Wellness Centre Project, the plan is to build a small gym on the rooftop of the
hotel. You have been appointed to help the Sales and Marketing manager to make decision
whether to rent or buy specific equipment items. The required items are included in
Appendix 1 together with costing information.
The budget for the required equipment is $45,550 for the life of the equipment. The useful
life of the equipment is predicted to be 3 years after which it will need to be replaced. At
the end of its useful life, it is expected to be sold for the residual value of 5% of its original
cost. From the renting options, choose the one that is the most beneficial for the business.
The rent is expected to rise by 3% each year. The rent is paid at the beginning of each
period. Servicing of the equipment is included in the rent price.
Assume that servicing its own equipment will cost the hotel additional $600 every year over
the period of its useful life. Assume that servicing is done at the end of each year. Ignore
GST for the purpose of this assessment task.
REQUIRED
The manager would like to know whether it would be better for the Hotel to buy the
equired equipment or to rent it. Explore both options and make a recommendation. Take
into account the time value of money at the discount rate of 8%. Base your decision on the
total cost of the specified equipment, not on an item by item basis.
Sales and Marketing Department Assessment
BIZ201_Assessment 4 Brief_M6_Case Study Page 5 of 19

All calculations are to be done in Excel. Summarise your findings in the business report.
Include advantages and disadvantages of each option and explain your choice.
TASK 2
The Sales and Marketing Manager has an idea of creating monthly memberships for
external visitors that he would like to explore further. He is thinking to create two types of
membership options. A Basic Membership which would include access to the gym, sauna
and pool and it would cost clients $40 a week. A Full Package Membership would
additionally to the access include a one hour weekly session with the in house personal
trainer and a dietician consultation once a month. Clients would pay $81 per week for this
type of membership.
He believes that an initial investment into promoting the centre would be $35,350 and
subsequent cost of continuous promotion would be $808 a month. At the beginning he
would like to make the service more exclusive and cap the membership to 20 basic
membership clients and 30 full package membership clients. He wants to create a feeling of
exclusivity amongst the clients.
Based on his calculations he believes offering the membership to the external clients would
generate total revenue of $137,360 in the first year increasing by 10% every year after that.
The in-house trainer is expected to cost the hotel $5555 a month and the services of
dietician additional $1515 and both are expected to increase by 3% each year.
REQUIRED
Calculate the net present value of the external membership project over the next 3 years
period. Use yearly basis for your calculations. The estimated cost of capital for the hotel is
8%. Assume 30% company tax in Australia when determining the values of the after tax net
cash flow for each year.
Based on your analysis would you recommend accepting the project and offer the
membership to the external clients? Explain the basis for your recommendation.
TASK 3
Once the Crystal Hotel Wellness Centre is ready for opening, it will need to be promoted to
existing and potential new clients. There is already an opening event (luncheon) planned
which is handled by the Functions and Events Department. The overall budget for
promoting the opening of the centre is $35,350. The opening luncheon is budgeted to cost
$20,200.
Your team has been appointed to plan additional promotional activities for the remaining
$15,150. The budget is aimed for the promotion of the opening of the centre only.
Continuous promotional activities as well as online advertising will be handled separately.
BIZ201_Assessment 4 Brief_M6_Case Study Page 6 of 19

Initial research has been done by the marketing team and the promotional activities to be
considered are listed in the Appendix 3. Negotiated pricing has been included as well.
REQUIRED
Your task is to choose suitable promotional activities from the list provided to you and
create a promotional budget for the Crystal Hotel Wellness Centre opening. Use the budget
template provided in the excel file and adjust it as appropriate. Use Excel formulas to
calculate your values. The final budget is to be included in the business report as well.
TASK 4
Marketing team has suggested Crystal Hotel to run a promotion. They are charging $80 per
person for one night’s accommodation including
eakfast. The variable cost per person is
$35 which includes food, cleaning and utilities. Fixed costs are $45, 000 per year which
include council rates rate, water rates and land taxes.
REQUIRED
They have asked for your expertise to ca
y out a CVP analysis for this promotion. Calculate
the following:
1. The contribution margin per unit of service (a unit of service is one night’s
accommodation for one guest).
2. The contribution margin ratio.
3. The annual
eak-even point in units of service and in dollars of service revenue.
4. The number of units of service required to earn a target net profit of $ 100, 000 for
the year (ignore income taxes).
5. Analysis the importance of CVP analysis and comment on effectiveness of this
promotion based on your calculations.
BIZ201_Assessment 4 Brief_M6_Case Study Page 7 of 19
TASK 1
As part of the refu
ishment project, the Crystal Hotel would like to introduce fresh plants
into the lo
y area, function and conference rooms. The
Answered Same Day May 08, 2020 BIZ201

Solution

Aarti J answered on May 13 2020
144 Votes
Sales - task 1
        Total budgeted cost    45550
        Life    3
        Residual value    5%
        Increase in rent    3%
        Additional cost    600
        Rate of discount    8%
            Pieces required    Cost per piece    Cost    Rent price - 1st yea
        Treadmill    3    6057    18171    5910
        Elliptical trainer    2    4039    8078    2020
        Exercise bike    4    3332    13328    3616
        Rowing machine    1    2726    2726    838
            10        42303    12384
        Calculatng cash flows
        Purchase - Treadmill
        Year    0    1    2    3
        Initial investment    -18171
        Maintenance cost        -600    -600    -600
        Salvage value                909
        Cash flows    -18171    -600    -600    309
        PVIF @ 8%    1    0.9259259259    0.8573388203    0.793832241
        Present value of the cash flows    -18171    -555.5555555556    -514.4032921811    244.9369379668
        Calculating the total cost at period 0    -18996.02
        Rent - Tredmill
        Year    0    1    2    3
        Initial investment    0
        Rental cost        -5910    -6087.3    -6269.919
        Salvage value                0
        Cash flows    0    -5910    -6087.3    -6270
        PVIF at beginning        0.9259259259    0.8573388203    0.793832241
        Present value        -5472.2222222222    -5218.878600823    -4977.2638507849
        Calculating the total cost at period 0    -15668.36
        Purchase - Elliptical traine
        Year    0    1    2    3
        Initial investment    -8078
        Maintenance cost        -600    -600    -600
        Salvage value                404
        Cash flows    -8078    -600    -600    -196
        PVIF @ 8%    1    0.9259259259    0.8573388203    0.793832241
        Present value of the cash flows    -8078    -555.5555555556    -514.4032921811    -155.6705024641
        Calculating the total cost at period 0    -9303.63
        Rent - Elliptical traine
        Year    0    1    2    3
        Initial investment    0
        Rental cost        -2020    -2080.6    -2143.018
        Salvage value                0
        Cash flows    0    -2020    -2080.6    -2143
        PVIF at beginning        0.9259259259    0.8573388203    0.793832241
        Present value        -1870.3703703704    -1783.7791495199    -1701.1967814866
        Calculating the total cost at period 0    -5355.35
        Purchase - Exercise bike
        Year    0    1    2    3
        Initial investment    -13328
        Maintenance cost        -600    -600    -600
        Salvage value                666
        Cash flows    -13328    -600    -600    66
        PVIF @ 8%    1    0.9259259259    0.8573388203    0.793832241
        Present value of the cash flows    -13328    -555.5555555556    -514.4032921811    52.7104608037
        Calculating the total cost at period 0    -14345.25
        Rent - Exercise bike
        Year    0    1    2    3
        Initial investment    0
        Rental cost        -3616    -3724.48    -3836.2144
        Salvage value                0
        Cash flows    0    -3616    -3724.48    -3836
        PVIF at beginning        0.9259259259    0.8573388203    0.793832241
        Present value        -3348.1481481482    -3193.1412894376    -3045.3106741859
        Calculating the total cost at period 0    -9586.60
        Purchase - Rowing...
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