Located near a national park on the Yarra River, Colbee Hotel was built in 1915 by the Top End Railway. In an effort to supplement its lodging revenue, the hotel decided in 2012 to begin manufacturing and selling small wooden canoes decorated with symbols hand-painted by local indigenous Australians. Due to the great success of the canoes, the hotel began manufacturing and selling paddles as well in 2015. Many hotel guests purchase a canoe and paddles for use in self-guided tours of the Yarra.
Because production of the two products began in different years,
the canoes and paddles are produced in separate production
facilities and employ different laborers. Each canoe sells for
$500, and each paddle sells for $50. the variable cost for canoe is
$300 and paddle is $40, while the fixed costs are $80,000 and
10,000 for canoe and paddle respectively. $30,000 of common fixed
costs for a customer service hotline used for both canoe and paddle
customers.
The hotel's accounting system data show an average sales mix of
approximately 300 canoes and 1200 paddles each season.
a. Use Cost-Volume-Profit analysis to calculate the break-even
point in units for :
-The canoe product line only (i.e., single-product setting)
-The paddle product line only (i.e., single-product setting)
b. Use Cost-Volume-Profit analysis to calculate the break-even point in units for both the canoe and paddle product lines combined (i.e., the multiple-product setting).
c. If both the variable and fixed costs associated with the canoe product line increased by 5%, how many canoes and paddles would need to be sold in order to earn a target income of $96,000?
d. Calculate the hotel's margin of safety (both in units and in sales dollars) for Colbee Hotel, assuming the same facts as in Requirement b, and assuming it sells 700 canoes and 2,500 paddles next year.
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
Less Revenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
LessRevenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
PRACTICAL QUESTION
Tiger Construction Ltd signs a contract on 1 May 2018 to build a theme park. The construction is scheduled to commence on 1 July 2018 and the estimated date of completion is 30 June 2021. The total contract price is $5m and the cost of the park is initially estimated at $4.5m. The following data relates to the construction period:
|
For the year ended 30 June |
|||
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date |
1,700,000 |
3,000,000 |
4,800,000 |
|
Estimated costs to complete |
2,800,000 |
1,700,000 |
- |
|
Progress billings to date |
1,400,000 |
2,600,000 |
5,000,000 |
|
Cash received to date |
1,200,000 |
2,200,000 |
5,000,000 |
Assume that cost (an input measure) is used as the basis for assessing progress on the construction contract.
Required
Determine the percentage of completion for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|
|
$ |
$ |
$ |
|
|
Costs to date (A) |
|||
|
Estimated costs to complete (B) |
|||
|
Estimated total cost (A+B=C) |
|||
|
Percent of completion (POC=A/C) |
Calculate revenue and gross profit for 2019, 2020 and 2021.
|
2019 |
2020 |
2021 |
|||||
|
$ |
$ |
$ |
|||||
|
Contract Price |
|||||||
|
Contact Price x POC |
|||||||
|
LessRevenue recognised in previous years |
|||||||
|
= Revenue recognised for the year |
|||||||
|
Less Costs for the year |
|||||||
|
= Gross profit for the year |
|||||||
Using the percentage of completion method, provide the journal entries for 2019, 2020 and 2021.
|
2019 $m |
2020 $m |
2021 $m |
|||
|
(i) |
To record costs incurred: |
||||
|
(ii) |
To record billings to customers: |
||||
|
(iii) |
To record cash collections: |
||||
|
(iv) |
To record periodic income recognised: |
||||
In: Accounting
1. The Howell’s decided to build a resort hotel on land owned by Chief Ugundi. For each of the following items, indicate whether the cost should be recorded as Land (L), Land Improvements (LI), Resort Hotel (RH), or Equipment (E) by placing the correct answer in the space provided. Answer Fences around the property site cost $50,000 Construction of the resort hotel cost $5,000,000 Demolition of existing huts on the land cost $80,000 Installation of wooden sidewalks between the resort hotel and parking lot cost $40,000 Architectural fees for the resort hotel cost $30,000 A construction permit obtained from Chief Ugundi cost $20,000 Clearing the brush and removing unwanted trees on the site cost $60,000 Purchased a wagon to assist with hauling away trees and dirt for $25,000 The Professor charged $40,000 to act as engineer and architect on the resort hotel Constructing permanent tiki torches around the site as lighting cost $10,000 Landscaping (shrubs and decorative ornaments) around the resort cost $100,000 The actual purchase price for the land cost $200,000
In: Accounting
Oriental Hotel Bhd owned a few hotels in Malaysia. Their hotel in Melaka is set against a picturesque vista of Melaka’s most famous historical landmarks pf Melaka Raya. The location is close to Melaka City Centre with cheerful nightlife and mere minutes from the acclaimed UNESCO World Heritage site. The office management operates in the same hotel building as the hotel services provided to its guest. The company itself manages the hotel except for the laundry services which was transferred to its tenant, Cuci-Cuci Services Sdn. BHd.
Oriental Hotel Bhd take another step forward in its expansion plan with the opening a new hotel in the southern region in Malaysia. On 1 January 20X5, the company acquired a land for RM3,200,000 to construct a 4-star hotel building in Pangerang, Johor. Construction of the hotel building commenced on 1 March 20X5 and it was completed on 31 January 20X7, but was only used on 1 March 20X7.Total construction cost incurred excluding borrowing costs were RM34,000,000. The construction cost also includes the rectification of RM200,000. In order to finance the construction, the company took an 8%, 3 year-term loan of RM30,000,000 on 1 February 20X5. The company received a government grant of RM1,400,000 on 1 February 20X7 for the newly constructed hotel building. It is the company’s policy to use deferred income method for the government grant received.
Required:
Explain the accounting treatment for government grant received and
how will it differ from the alternative method.
In: Accounting
Illustrate how a hotel, restaurant, or theater can deal with the intangibility, inseparability, variability, and perishability of the service it provides. Give specific examples.
In: Accounting
Use this scenario "How to turn a movie theater into a hotel franchise." Create of a operations plan that shows how the product or service will be delivered
In: Finance
Disney offers both hotel rooms and entrance to their theme parks at their resorts. Consider four different market segments with willingness to pay for rooms and market shares shown in the table below. Assume a total market size of 5,000 individuals per day.
Segment Amusement
Park Lover, Luxury Lover, Conference Devotee, Disney Devotee
Room, $200 $300 $325 $50 Theme Park $150 $50 $5 $200 Market Share
20% 10% 20% 50%
a) Scenario A: Consider a Disney price menu with the Hotel Room at
$300 and Theme Park Entrance at $150. Complete the chart by
answering the following questions. i. Calculate the consumer
surplus for each segment with each offering. (4 points) ii.
Calculate the revenue earned from each offering and market segment.
(4 points)
Consumer Surplus Room Theme Park Amusement Park Lover Luxury Lover
Conference Devotee Disney Devotee Revenue Theme Park Room Amusement
Park Lover Luxury Lover Conference Devotee Disney Devotee
b) Scenario B: Consider a Disney price menu of Hotel Room at
$200 and Theme Park Entrance at $150. Complete the chart by
answering the following questions. i. Calculate the consumer
surplus for each segment with each offering. (4 points) ii.
Calculate the revenue earned from each offering and market segment.
(4 points) Consumer Surplus Room Theme Park Amusement Park Lover
Luxury Lover Conference Devotee Disney Devotee Revenue Theme Park
Room Amusement Park Lover Luxury Lover Conference Devotee Disney
Devotee
c) Scenario C: Consider a Disney price menu of Hotel Room at $325
and Theme Park Entrance at $200, and Hotel + Theme Park Bundle for
$350. Complete the chart by answering the following questions. i.
Calculate the consumer surplus for each segment with each offering.
(6 points) ii. Calculate the revenue earned from each offering and
market segment. (6 points)
Consumer Surplus Theme Park Room Room + Theme Park Amusement Park
Lover Luxury Lover Conference Devotee Disney Devotee Revenue Room
Theme Park Room + Theme Park Amusement Park Lover Luxury Lover
Conference Devotee Disney Devotee
d) What are the optimal prices of the Hotel Rooms and Theme Park Entrance in the absence of bundling? (3 points)
e) Compare the revenue obtained in part (c)(ii) with the revenue obtained in part (d)? (2 points)
f) Explain the intuition about why bundling increases the overall revenue earned? (3 points)
I know how to do part a and b but not sure for part c, d, and e
In: Economics
In: Economics