It is said that Bed & Breakfast (B&Bs) can contribute to a more ‘authentic’ travel experience for tourists rather than hotel chains. It also provides mutual benefits for both the visitor and the operator. While licensing can be a concern, the HKTB’s hotel rating system being used is also considered not applicable to rate the ‘quality’ of B&Bs for several reasons. If the HKTB’s hotel rating system is applied to rate the B&Bs in Hong Kong, explain how it will disadvantage or advantage the grading of a B&B based on the FIVE key indicators being used in this stage.

A combination of quantitative indicators:

1. Facilities (F&B, IT, Business and Health Related)

2. Location

3. Staff to Room ratio

4. Average Achieved Room Rate

5. Business Mix   

It is said that Bed & Breakfast (B&Bs) can contribute to a more ‘authentic’ travel experience for tourists rather than hotel chains. It also provides mutual benefits for both the visitor and the operator. While licensing can be a concern, the HKTB’s hotel rating system being used is also considered not applicable to rate the ‘quality’ of B&Bs for several reasons. If the HKTB’s hotel rating system is applied to rate the B&Bs in Hong Kong, explain how it will disadvantage or advantage the grading of a B&B based on the FIVE key indicators being used in this stage.

A combination of quantitative indicators:

1. Facilities (F&B, IT, Business and Health Related)

2. Location

3. Staff to Room ratio

4. Average Achieved Room Rate

5. Business Mix

2. Demand for hotel rooms in Tallahassee takes two possible values: on game days, demand is described by the demand curve q = 100−p, while on non-game-days demand is described by the demand curve q = 60 − 2p.

(a) Suppose that the hotel price on game days is ph = 80. What quantity is demanded at this price?

(b) Find the inverse demand curve on non-game-days. Assuming that the price on game days is ph = 80 as above, what price would induce the same quantity demanded on non-game-days as on game days?

(c) Plot the demand curves on game days and on non-game-days. Pay careful attention to the price and quantity intercepts for both curves.

(d) Assuming the price on non-game-days is as you found in (ii), what is consumer surplus in this market on non-game-days? What is consumer surplus on game days?

(e) Suppose that you encounter the following claim: “Because the hotel price is higher on game days than on non-game-days, consumer surplus in the hotel market must be lower on game days.” What is wrong with this claim?

Demand for hotel rooms in Tallahassee takes two possible values: on game days, demand is described by the demand curve q = 100−p, while on non-game-days demand is described by the demand curve q = 60 − 2p.

(a) Suppose that the hotel price on game days is ph = 80. What quantity is demanded at this price?

(b) Find the inverse demand curve on non-game-days. Assuming that the price on game days is ph = 80 as above, what price would induce the same quantity demanded on non-game-days as on game days?

(c) Plot the demand curves on game days and on non-game-days. Pay careful attention to the price and quantity intercepts for both curves.

(d) Assuming the price on non-game-days is as you found in (ii), what is consumer surplus in this market on non-game-days? What is consumer surplus on game days?

(e) Suppose that you encounter the following claim: “Because the hotel price is higher on game days than on non-game-days, consumer surplus in the hotel market must be lower on game days.” What is wrong with this claim?

a) In order to determine the average price of hotel rooms in Atlanta, a sample of 61 hotels were selected. It was determined that the average price of the rooms in the sample was $111.9. The population standard deviation is known to be $19. We would like to test whether or not the average room price is significantly different from $110.

Compute the test statistic.

b) In order to determine the average price of hotel rooms in Atlanta, a sample of 61 hotels were selected. It was determined that the test statistic (z) was $-1.01. We would like to test whether or not the average room price is significantly different from $110. Population standard deviation is known to us.

Compute the p-value.

c) In order to determine the average price of hotel rooms in Atlanta. Using a 0.1 level of significance, we would like to test whether or not the average room price is significantly different from $110. The population standard deviation is known to be $16. A sample of 64 hotels was selected. The test statistic (z) is calculated and it is -1.8.

We conclude that the average price of hotel rooms in Atlanta is NOT significantly different from $110. (Enter 1 if the conclusion is correct. Enter 0 if the conclusion is wrong.)

You are the financial manager of Walnut Grove City, a small mid-eastern town, and in charge of creating a capital budget for the next year. The only project on the agenda is building a clock tower within the city square and expanding the adjacent park for small events. You must incorporate into the budget the expense of building a clock tower in the city's town square and adjacent park, and may choose the size, exact location and materials to be used. The expense for the clock tower is estimated to be $400,000 and clean-up of the adjacent park is estimated to be $50,000. After the expansion, three events are planned: 1. Street party celebrating the new clock tower and park which will continue as an anniversary party every year thereafter, and is expected to have a net income of $75,000; 2. Fourth of July fireworks celebration with expected net income of $125,000; and 3. Labor Day carnival to celebrate going back to school and harvest which is expected to have a net income of $50,000. All three events will be continued each following year.

Explain the five capital budgeting steps you will use and how each step will be associated with the clock tower project.

An online retailer of small gifts orders products from a number of suppliers, stores them, packs them to customers’ orders, and then dispatches them using a distribution company. Although broadly successful, the business is very keen to reduce its operating costs. A number of suggestions have been made to do this. There are as follows:

• Quality: Make each packer responsible for his or her own quality. This could potentially reduce the percentage of mis-packed items from 0.5% to near zero. Repacking an item that has been mis-packed costs RM1 per item.
• Speed: Negotiate with suppliers to ensure that they respond to delivery requests faster. It is estimated that this would cut the value of inventories held by the retailer by RM200,000.
• Dependability: Institute a simple control system that would give early warning if the total number of orders that should be dispatched by the end of the day actually is dispatched in time. Currently 2% of orders is not packed by the end of the day and therefore has to be sent by express courier the following day. This costs an extra RM1 per item.

If the online retailer dispatches two million items every year and if the cost of holding inventory is 9% of its value, how much cost will each suggestion save the company? State the total savings.

An online retailer of small gifts orders products from a number of suppliers, stores them, packs them to customers’ orders, and then dispatches them using a distribution company. Although broadly successful, the business is very keen to reduce its operating costs. A number of suggestions have been made to do this. There are as follows:

 Quality: Make each packer responsible for his or her own quality. This could potentially reduce the percentage of mis-packed items from 0.5% to near zero. Repacking an item that has been mis-packed costs RM1 per item.

 Speed: Negotiate with suppliers to ensure that they respond to delivery requests faster. It is estimated that this would cut the value of inventories held by the retailer by RM200,000.

 Dependability: Institute a simple control system that would give early warning if the total number of orders that should be dispatched by the end of the day actually is dispatched in time. Currently 2% of orders is not packed by the end of the day and therefore has to be sent by express courier the following day. This costs an extra RM1 per item.

If the online retailer dispatches two million items every year and if the cost of holding inventory is 9% of its value, how much cost will each suggestion save the company? State the total savings

In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)