You are hoping to get an estimate of the number of birch trees in a local park. You have a satellite image of the park, and plan to use quadrat sampling to estimate the number of birch trees in the park. The park is 1000m by 1000m. Describe how you can set up your quadrat and how you would then use the data you collect to estimate the number of trees in the entire park. (Include a sample calculation).
In: Statistics and Probability
Playland at Pacific National Exhibition is an amusement park offering 31 different rides (including 4 rollercoasters and 1 water ride). The guests who are 48” or taller can go on any ride they want and so they get more value from visiting the park; let us say their individual demand is given by P = 5 – 0.25qO, where P is the price per ride ($ per ride) and qO is the number of the rides (per day) (the subscript O stands for “One Day;” that’s how the park calls its passes for the guests who are 48” or taller). The guests who are under 48” are not allowed on certain rides so they get less value from visiting the park; let us say their individual demand is given by P = 4 – 0.25qJ, where P is the price per ride ($ per ride) and qJ is the number of the rides (per day) (the subscript J stands for “Jr. One Day;” that’s how the park calls its passes for the guests under 48”). Assume it costs the park flat ¢25 per guest to operate a single ride, and it costs the park flat ¢75 to issue a single ticket to a ride. Assume there are 500 guests 48” or taller and 500 guests under 48” on an average day. We can consider Playland a monopolist in Vancouver
If Playland employed a two-part tariff scheme (the park may choose to ticket each ride, or they may choose to let people go on as many rides [at zero price per ride] as they want and only charge the gate fee for the access to the rides),
6. what would be the gate entry fee for guests 48” or taller ($ per guest)?
7. what would be the gate entry fee for guests under 48” ($ per guest)?
8. what would be the price per ride ($ per ride)?
9. what is Playland’s profit on an average day ($ per day)? Assume zero fixed cost.
In: Economics
| A large hotel chain buys its cleaning supplies in bulk from a national vendor. The hotal purchasing manager currently orders a multi-purpose cleanser used to clean the guest bathrooms in quantities of 6,000 gallons at a time. She is considering changing the order quantity to the EOQ. The manager has collected the data in the table below. Use the data to answer questions a-d below. The hotel is open 365 days out of the year. | ||
| Inventory Information for Shower Cleanser | ||
| The Cost of a Gallon of the Cleanser | $9.95 | |
| Annual Holding Cost (as a % of Cost) | 18% | |
| Cost to Place an Order | $15.00 | |
| Average Daily Demand (in gallons) | 1000 | |
| Current Order Quantity | 6000 | |
| a) What is the EOQ for the cleanser? | ||
| b) What would the annual ordering cost be under the EOQ? | ||
| c) What would the annual holding cost be under the EOQ? | ||
| d) How much money would the company save annually if it switched to the EOQ? | ||
In: Operations Management
The Hotel El Politécnico has # 500 rooms. They usually have a cost per room of $ 70.00, plus a fixed cost of $ 5,000.00 per day. Each room is rented for $ 175.00 per day during the summer season. Answer the following questions using the above data:
a) If the Hotel operates at 70% capacity for one day, what is the net profit (gain / loss)?
b) What is the equilibrium point (B. E. P.)? in units, if it operates at full capacity
c) Would you recommend lowering the current price per room to earn $ 40,000, if 20% of the rooms are unoccupied? What would be the new price per room?
d) What should be the variable cost per daily unit to
earn $ 30,000.00; at its 80% capacity?
In: Economics
Sunshine Hotel needs new laundry equipment. There are two alternatives, either buy or lease the equipment. The hotel owner is asking your recommendation to pay less for the equipment.
| Buy ($) | Lease ($) | |
| Cost of equipment | 20,000 | |
| Semi-annual equipment rental | 3,000 | |
| Salvage value after five years | 1,000 | |
| Annual costs: | ||
| Labor | 15,000 | 15,000 |
| Supplies | 1,000 | 1,000 |
| Utilities | 3,000 | 3,000 |
| Interest expense | 1,500 | - |
| Repairs | 200 | - |
Prepare a five-year cost schedule for each alternative (Include only relevant costs).
What is the cost if the owner buys or leases the equipment?
A. Buy: $ 28,500; Lease: $15,000
B. Buy: $ 27,000; Lease: $30,000
C. Buy: $ 27,500; Lease: $30,000
D. Buy: $ 25,100; Lease: $18,000
In: Accounting
Pacific Hotels operates a centralized call center for the reservation needs of its hotels. Costs associated with use of the center are charged to the hotel group (luxury, resort, standard, and budget) based on the length of time of calls made (time usage). Idle time of the reservation agents, time spent on calls in which no reservation is made, and the fixed cost of the equipment are allocated based on the number of reservations made in each group. Due to recent increased competition in the hotel industry, the company has decided that it is necessary to better allocate its costs in order to price its services competitively and profitably. During the most recent period for which data are available, the use of the call center for each hotel group was as follows:
| Division | Time Usage(thousands of minutes) | Number of Reservations (thousands) | ||||
| Luxury | 220 | 135 | ||||
| Resort | 110 | 165 | ||||
| Standard | 440 | 315 | ||||
| Budget | 330 | 885 | ||||
During this period, the cost of the call center amounted to $880,000 for personnel and $630,000 for equipment and other costs.
Required:
a. Determine the allocation to each of the divisions using the following:
1. A single rate based on time used. (Do not round intermediate calculations.)
| Department | Allocated Cost |
| Luxury | |
| Resort | |
| Standard | |
| Budget |
2. Dual rates based on time used (for personnel costs) and number of reservations (for equipment and other cost). (Do not round intermediate calculations.)
| Department | Allocated Cost |
| Luxury | |
| Resort | |
| Standard | |
| Budget |
In: Accounting
The Hotel has two operating departments. Rooms and F&B. 70% of the hotel's total revenue is earned from room sales and 30% of the total revenue is earned from F&B sales.
Rooms department's contribution margin ratio is 60% and F&B department's contribution margin ratio is 50%. If the fixed cost of the hotel is $400,000, and the management is targeting a before -tax profit of $150,000, what is the required sales revenue? (Rounded to whole numbers)
A.$964,912
B.$795,230
C.$1,234,502
D.$701,754
In: Accounting
Problem 1
The
King Hotel
has 400 rooms. Each room rents for $62 per day and has a variable cost of $12 per day.
The hotel’s monthly fixed costs are $450,000.
(Assume that each month has 30 days.)
Required:
1.
Compute the breakeven point in rooms
rented.
2.
Compute the daily occupancy percentage that the hotel must have in order to break even.
3.
Compute the total number of rooms that must be paid for and occupied
per month
to earn a profit of
$100,000?
In: Accounting
Introduction - AdCreate's Client Portfolio. Read the overview below and complete the activities that follow.
AdCreate is a full-service advertising agency with several high profile marketing firms as clients. Given their vast client list and the varied services they provide to different clients, they are compensated differently by different clients. Jacob Stein, who recently joined AdCreate in the finance department, was asked to review the various compensation models being used by some of AdCreate's biggest clients.
CONCEPT REVIEW: The type and amount of services an ad agency performs vary from one client to another. As a result, agencies use a variety of methods to get paid for their services. Agencies are typically compensated in three ways: commissions, some type of fee arrangement, or percentage charges.
Case Analysis
Agency Compensation Methods:
Read the report below, which provides a summary of AdCreate's compensation agreements with four of its major clients, and answer the questions that follow. NOTE: There may be more than one answer to each question. You MUST list all potential answers for full marks.
AdCreate has a negotiated commission system agreement with Worry Free Financial. Worry FreeFinancial advertises on T.V. mainly and has the following sliding scale for media commissions in its agreement with AdCreate: 15% commission for media expenditures of less than $ 300,000, 12.5%commission for media expenditures between $ 300,000 and $ 400,000 and 10% commission for media expenditures above $ 500,000.
AdCreate has a cost-plus agreement with Still Water Furnishings. Under the cost-plus terms, AdCreate uses a mark up of 13% for services provided to Still Water Furnishings.
With Anchor Motors, AdCreate has an incentive-based agreement. Under the terms of this agreement, AdCreate gets to keep the full 15% commission from media if Anchor Motor's sales for the period of advertising show an increase of 5% or greater compared to sales in the same period the previous year. For sales increase between 3% and 5%, AdCreate gets to keep 13% out of the 15% media commission. Finally, for sales increase between 1% and 3%, AdCreate gets to keep 10% out of the 15% media commission.
AdCreate has a percentage charges agreement with Globe Travel Adventures. Under these terms, AdCreate charges a mark up of 17.65% on services from outside providers like printers, photographers, etc.
Please explain your answers, and why you chose that specific answer over others.
Question 1.
AdCreate has negotiated a rate of 12.5% for a commission system payment, with Worry Free Financial for a campaign in 2010. AdCreate arranged for airing three ads, during Newshour on CNN, in the first week of the launch campaign. AdCreate's income for these three ads in the first week was $49,375. Based on this information, which of the following is true?
I. The client (Worry Free Financial) paid AdCreate $425,625 for the three ads
II. AdCreate paid CNN $425,625 for the three ads
III. AdCreate paid CNN $345,625 for the three ads
Question 2.
Under the cost-plus agreement that AdCreate has with its client Still Water Furnishings, Jacob Stein noticed that AdCreate incurred costs of $625,000 for a print and direct mail campaign during 2010. Under the cost-plus terms, AdCreate used a mark up of 13% for services provided to Still Water Furnishings. Based on this information, which of the following is true?
a. The client (Still Water Furnishings) paid AdCreate $706,250 in 2010
b. AdCreate's income from the Still Water Furnishings account in 2010 was $81,250
c. The client (Still Water Furnishings) paid AdCreate $700,000 in 2010
Question 3.
In reviewing the incentive-based agreement between AdCreate and Anchor Motors, Jacob Stein found that sales of Anchor rose 5.2% compared to the previous year in the second quarter. AdCreate paid the media $895,000 for Anchor Motors ads during the same period. Based on this information, which of the following is true for the second quarter billings?
a. AdCreate billed Anchor Motors $1,152,941 for the second quarter in 2010
b. AdCreate's income from the Anchor Motors account for the second quarter of 2010
was $257,941
c. AdCreate billed Anchor Motors $1,052,941 for the second quarter in 201
Question 4.
In reviewing the agreement between AdCreate and Anchor Motors, Jacob Stein found that sales of Anchor rose 2.8% compared to the previous year in the third quarter. AdCreate paid the media $450,000 for Anchor Motors ads during the same period. Based on this information, which of the following is true for the third quarter billings?
1. AdCreate billed Anchor Motors $502,941 for the third quarter in 2010
2. AdCreate's income from the Anchor Motors account for the third quarter of 2010 was $79,4123. AdCreate billed Anchor Motors $529,412 for the third quarter in 2010
Question 5.
In reviewing the percentage charges agreement between AdCreate and Globe Travel Adventures, Jacob Stein found that AdCreate paid a printing firm $220,000 for a direct mail brochure for Globe Travel Adventures in 2010. Based on this information, which of the following is true?
1. AdCreate's income from Globe Travel Adventures in 2010 was $28,830
2. The mark up of 17.65% of the cost amounts to a 15% commission
3. AdCreate billed Anchor Motors $258,830 in 2010
In: Finance
Consider the case of a sheep farmer who lives next door to an African Safari theme park with dangerous lions. If the lions come in contact with the sheep, they kill them and eat them, costing the sheep farmer damages of $15,000. However, the theme park can build a fence around the lions for $6000. In the alternative, the sheep farmer can fence off his pasture for $8000. Assume that it costs the sheep farmer and the Safari park each $2000 to hire a lawyer if they have to negotiate an agreement between them. What is the efficient outcome here? Why? Suppose that the Safari Park is granted a right of free roaming so that it does not have to fence off its animals and is not liable for any damages they cause. What is the likely outcome now? Will the sheep farmer and the Safari negotiate? Why or why not? Now suppose that the cost of legal advice drops to $500 in part b). How does that change the likely outcome? Why? Assume the legal rule changes, so that the sheep farmer is granted right to safe grazing. If the Safari is held liable for damages to sheep, what is the likely outcome?
In: Economics