Multiple-Step Income Statement

On March 31, 20Y4, the balances of the accounts appearing in the ledger of Danns Furnishings Company, a furniture wholesaler, are as follows:

a. Prepare a multiple-step income statement for the year ended March 31, 20Y4.

b. What is a major advantage of the multiple-step income statement over the single-step income statement?

II. Room Pricing in the Off-Season (Modeling)

The data in the table, from a survey of hotels with comparable rates on Hilton Head Island, show that room occupancy during the off-season (November through February) is related to the price charged for a basic room.

The goal is to use these data to help answer the following questions.

1. What price per day will maximize the daily off-season revenue for a typical hotel in this group if it has  rooms available?

2. Suppose that for this typical hotel, the daily cost is  plus  per occupied room. What price will maximize the profit for this hotel in the off-season?

The price per day that will maximize the off-season profit for this typical hotel applies to this group of hotels. To find the room price per day that will maximize the daily revenue and the room price per day that will maximize the profit for this hotel (and thus the group of hotels) in the off-season, complete the following.

1. Multiply each occupancy rate by  to get the hypothetical room occupancy. Create the revenue data points that compare the price with the revenue, , which is equal to price times the room occupancy.

2. Find an equation that models the revenue, , as a function of the price per day, .

3. Use maximization techniques to find the price that these hotels should charge to maximize the daily revenue.

4. Find a model for the occupancy as a function of the price, and use the occupancy function to create a daily cost function.

5. Form the profit function.

6. Use maximization techniques to find the price that will maximize the profit.

Even within a particular chain of hotels, lodging during the summer months can vary substantially depending on the type of room and the amenities offered. Suppose that we randomly select 50 billing statements from each of the computer databases of the Hotel A, the Hotel B, and the Hotel C chains, and record the nightly room rates. The means and standard deviations for 50 billing statements from each of the computer databases of each of the three hotel chains are given in the table.

(a) Find a 95% confidence interval for the difference in the average room rates for the Hotel A and the Hotel C chains. (Round your answers to two decimal places.)
$  to $  

(b) Find a 99% confidence interval for the difference in the average room rates for the Hotel B and the Hotel C chains. (Round your answers to two decimal places.)
$  to $  

(c) Do the intervals in parts (a) and (b) contain the value (μ₁ − μ₂) = 0?

Yes, the interval in part (a) contains (μ₁ − μ₂) = 0.Yes, the interval in part (b) contains (μ₁ − μ₂) = 0.    Yes, both intervals contain (μ₁ − μ₂) = 0.No, neither interval contains (μ₁ − μ₂) = 0.

Why is this of interest to the researcher?

If (μ₁ − μ₂) = 0 is contained in the confidence interval, it is implied that the room rate for one of the hotels was $0.If (μ₁ − μ₂) = 0 is contained in the confidence interval, it is implied that there is no difference in the average room rates for the two hotels.    If (μ₁ − μ₂) = 0 is contained in the confidence interval, it is implied that there was an error in the database records.If (μ₁ − μ₂) = 0 is contained in the confidence interval, it is implied that there is a difference in the average room rates for the two hotels.If (μ₁ − μ₂) = 0 is contained in the confidence interval, it is implied that the average room rate for the two hotels was $0.

(d) Do the data indicate a difference in the average room rates between the Hotel A and the Hotel C chains?

Yes, the data indicate a difference in the average room rates between the Hotel A and the Hotel C chains.No, the data do not indicate a difference in the average room rates between the Hotel A and the Hotel C chains.    

Do the data indicate a difference in the average room rates between the Hotel B and the Hotel C chains?

Yes, the data indicate a difference in the average room rates between the Hotel B and the Hotel C chains.No, the data do not indicate a difference in the average room rates between the Hotel B and the Hotel C chains.   

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

Basic Dominator Total

Units produced 1,000 450 1,450

Machine-hours 3,000 2,800 5,800

Direct labor-hours 2,900 2,300 5,200

Direct materials costs $ 8,200 $ 3,350 $ 11,550

Direct labor costs 58,700 31,300 90,000

Manufacturing overhead costs 183,560

Total costs $ 285,110

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor-hours to allocate overhead costs.

Predetermined overhead rate __________% per direct labor hour

The Park Manager at Fort Fisher State Park in North Carolina believes the typical park visitor spends at least 90 minutes in the park during summer months. A sample of 18 visitors during the summer months of 2011 revealed the mean time in the park was 96 minutes with a standard deviation of 12 minutes. At the 0.01 significance level, is it reasonable to conclude that the mean time in the park is greater than 90 minutes? What is alpha?

What levels of pay and benefits should you offer?

An important element of the human resource function is the determination and administration of pay and benefits. Pay includes employees' base salaries, pay raises, and bonuses, and is determined by a number of factors such as characteristics of the organization, the nature of the job, and levels of performance. Employee benefits are based on membership in an organization (and not necessarily on the particular job held) and include sick days, vacation days, and medical and life insurance. It is important to link pay to behaviors or results that contribute to organizational effectiveness.

Read the case concerning one of the leading hotel chains in the world, The Four Seasons Hotels and Resorts. The Four Seasons has an excellent reputation for customer service and also for employee satisfaction. Afterwards, analyze the reasons behind this reputation.

In 2015, Four Seasons Hotels and Resorts was one of only 12 companies to be ranked one of the "100 Best Companies to Work For" every year since Fortune magazine started this annual list. The Four Seasons often receives other awards and recognition such as being named the "Best Hotel Group Worldwide" by Gallivanter's Guide and dominating Travel & Leisure's World's Best Awards Readers' Poll and Condé Nast Traveler's Readers' Choice Awards based on customers' responses. In an industry in which annual turnover rates are over 35%, the Four Seasons' is around 13%. Evidently, employees and customers alike are satisfied with how they are treated at the Four Seasons. Understanding that the two are causally linked is perhaps the key to the Four Seasons' success. As the Four Seasons' founder, Isadore Sharp said, "How you treat your employees is how you expect them to treat the customer."

The Four Seasons was founded by Sharp in 1961 when he opened his first hotel. It was called the Four Seasons Motor Hotel, located in a less-than-desirable area outside downtown Toronto. Whereas his first hotel had 125 inexpensively priced rooms appealing to the individual traveler, his fourth hotel was built to appeal to business travelers and conventions. It had 1,600 rooms, conference facilities, several restaurants and banquet halls, and an arcade of shops. Both styles of hotels were successful, but Sharp decided he could provide customers with a different kind of hotel experience by combining the best features of both kinds of hotel experiences—the sense of closeness and personal attention that a small hotel brings with the amenities of a big hotel to suit the needs of business travelers.

Sharp sought to provide the kind of personal service that would really help business travelers on the road—giving them the amenities they have at home and in the office, amenities they miss when traveling on business. The Four Seasons was the first hotel chain to provide bathrobes, shampoo, around-the-clock room service, laundry and dry cleaning services, large desks in every room, two-line phones, and around-the-clock secretarial assistance. While these are relatively concrete ways of personalizing the hotel experience, Sharp realized that how employees treat customers is just as, or perhaps even more, important. When employees view each customer as a unique individual with his or her own needs and desires, and empathetically try to meet these needs and desires and help customers overcome any problems or challenges they face and truly enjoy their hotel experience, a hotel can indeed serve the purpose of a home away from home (and an office away from office), and customers are likely to be loyal and highly-satisfied.

Sharp realized that for employees to treat customers well, the Four Seasons needed to treat its employees well. Salaries are relatively high at the Four Seasons by industry standards. Employees participate in a profit sharing plan, and the company contributes to their 401(k) plans. Four Seasons provides medical and dental insurance. All employees get free meals in the hotel cafeteria, have access to staff showers and a locker room, and receive an additional highly attractive benefit—once a new employee has worked for the Four Seasons for six months, he or she can stay for three nights free at any Four Seasons hotel or resort in the world. After a year of employment, this benefit increases to six free nights, and it continues to grow as tenure with the company increases. Employees like waitress Michelle De Rochemont love this benefit. As she said, "You're never treated like just an employee. You're a guest . . . You come back from those trips on fire. You want to do so much for the guest." The Four Seasons also tends to promote from within. For example, while recent college graduates may start out as assistant managers, those who do well and have high aspirations could potentially become general managers in fewer than 15 years. This promotion system helps to ensure that managers have empathy and respect for those in lower-level positions as well as the ingrained ethos of treating others (employees, subordinates, coworkers, and customers) as they would like to be treated. All in all, treating employees well leads to satisfied customers at the Four Seasons.

1.The Four Seasons Hotel and Resorts can causally link its ____________ to its customers’ satisfaction and the many awards it has received including being one of the “100 Best Companies to Work For.”

A.use of programmed decision making

B.high turnover rate

C.high levels of pay and benefits

D.use of strict supervision over its employees

E.cost cutting measures

2.The Four Seasons uses ________ to motivate superior customer service.

A.high levels of pay and benefits

B.high pay levels with low levels of benefits

C.average pay levels with average benefits

D.average pay levels with high levels of benefits

E.high pay combined with average benefits

3.Which of the following does the Four Seasons have to offer by law?

A.matching contributions to 401(k) plans

B.high salaries

C.profit sharing plans

D.free meals in the cafeteria

E.Social Security insurance

4.Why does the Four Seasons continue to offer such extremely expensive benefits to its employees?

A.The Four Seasons focuses only on long-term costs, and these are short-term costs.

B.The workers’ union negotiated them.

C.The benefits offered by the Four Seasons are actually normal in the luxury hotel market.

D.It can write them off on the corporation’s income taxes.

E. The value gained in worker motivation outweighs the cost of the benefits in the long run.

5.The Four Seasons pays high salaries and provides expensive benefits. This suggests they are not following a(n) ______ strategy.

A.cafeteria plan

B.low-cost

C.employee satisfaction

D.high-performance

E.customer service focused

6.The Four seasons provides some unusual benefits. As described in the case, which of the following is NOT one of the benefits that sets the Four Seasons apart from other hotel chains?

A.high levels of health and dental insurance

B.free vacations at company-owned resorts

C.accrued vacation and sick leave days

D.free meals in the hotel cafeteria

E.access to staff showers and locker rooms

7.The Four Seasons offers _____ to its employees. Employees say this benefit lets them know what the guests feel like and makes them want to do even more for guests.

A.locker rooms and employee showers

B.free stays as guests at any of the company’s properties

C.high pay levels

D.matching 401(k) programs

E.company products such as robes and shampoos

The Tower Hotel has two operating departments: Rooms and F&B. 69% of the hotel’s total revenue is earned from room sales and the remaining revenue is earned from F&B sales. Rooms department’s contribution margin ratio is 65% and F&B department’s contribution margin ratio is 54%. If the fixed cost of the hotel is $411,206, and the management is targeting a before-tax profit of $146,476, what is the required sales revenue? (Rounded to whole numbers)

The Appalachian Bear Center (ABC) is a not-for-profit organization located near the Great Smoky Mountains National Park. ABC’s programs include the rehabilitation of orphaned and injured black bears, as well as research and education about Appalachian black bears. ABC provides the most natural environment possible for rehabilitating black bears before their release back into the wild. Katie Settlage performed a study to learn more about the Appalachian black bear population in the Great Smoky Mountains National Park. She and a team of researchers used a sample of 68 black bears in the park and took measurements such as paw size, weight, and shoulder height.

Answer the following questions based on this data. As always, you must show all work and formulas used in order to receive full credit. Round all decimals to three places unless otherwise noted.

1. In the sample of 68 bears, 40 were males. Construct an 80% confidence interval for the population proportion of bears that are males and write a statement interpreting the interval. (12 points)

Questions 2 and 3 refer to the following information regarding the 28 female bears from the study. For these 28 female bears, the sample mean is 75.679 cm and the sample standard deviation is 7.592 cm. Assume the data is normally distributed and the sample is randomly selected.

2. Use the female sample to make an interval estimate of the mean shoulder height of female bears. Construct the confidence interval estimate using a 95% confidence level and make a statement interpreting this interval.

3. Using a 99% level of confidence, construct the confidence interval for the population standard deviation based on the female data and make a statement interpreting these intervals.

A Bacon Factory is located in a small town. Also in the town is a Water Park. The smell of the Bacon factory has adversely affected the Water Park such that it has put in air cleaning equipment to eradicate the odor created by the factory. Please show your work..

The cost function of the Bacon Factory is:

      C_BF= B² + 4B^1/2 + (1 − x)²

where B denotes the quantity of bacon produced annually and x denotes the quantity of pollutants that A creates in a given year.

Thus, the Bacon Factory can limit production costs by eliminating its air scrubbers. However, the air pollution increases the costs for the water park W, whose cost function is:

      C_WP = W² + 2x,

where W denotes the number of visitors to the Water Park on an annual basis.   Suppose that the unit price of admission to the water park is $3 and that the unit price of bacon is $32.5 per unit.

A. Compute the profit maximizing quantity of the Bacon Factory (B) and pollutant (x) produced by Bacon Factory B (assuming B behaves competitively in the output market, i.e., taking the price of Bacon as $32.50). Also, compute the Bacon Factory’s (Firm B) profits.

B. Compute the profit maximizing visits (represented by W) created by Firm W (assuming W behaves competitively in the output market, i.e., taking the price of visits as given). Notice that W does not choose x. Also, compute W’s profits.

C . Suppose now that the two firms B and W merge, creating B&W. The management of B&W now maximizes B&W’s profits by appropriately choosing x, B, and W. Find the quantities of Bacon, Water Park Visits, and pollutants that the new firm produces. Also, find the profits of B&W.

How can a theme park eliminate waiting in long lines including rides etc. How much will they cost? What resources and expenditures will your solution entail?