Assume a situation in which a company has an existing asset, A, that has a current net book value (original cost less accumulated depreciation to date) of $300,000. This asset has a useful life of 3 additional years. Its estimated disposal (sales) value both today and at the end of 3 years is zero. Asset B, which would replace A, could be purchased today for $600,000. If purchased, B would generate annual (cash) operating cost savings (pretax) of $280,000 for each year of its 3-year useful life. In determining depreciation deductions for tax purposes, assume the straight-line method and zero salvage value for both assets. The company is subject to a combined (federal, state, and local) income tax of 40%, both for operating income and gains/losses related to the sale of assets. Other than the initial outlay for asset B, assume that all cash flows (and related tax payments) occur at the end of the year. Assume a weighted-average cost of capital of 10%. (Use Table 1  and Table 2.) (Do not round intermediate calculations.)

Required:
1. Determine the relevant (i.e., differential) cash flows (after-tax) at each of the following three points related to this asset-replacement decision: (1) project initiation (i.e., time 0)
2. What is the estimated net present value of the decision to replace asset A (the existing asset) with asset B? Use the built-in NPV function in Excel.
3. What is the weighted-average cost of capital (WACC) that would make the company indifferent between keeping or replacing asset A? Use the Goal Seek option in Excel to answer this question.

John’s Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers. The company is organized into two divisions: Personal and Business. Once a computer is built, it is shipped to the customer. Billing for all customers is handled by the corporate Accounts Receivable Department. Accounts Receivable performs two major activities: billing and dispute resolution. Billing refers to preparing and sending the bills as well as processing the payments. Dispute resolution occurs when a customer refuses to pay, usually due to an error in billing.

The costs of the Accounts Receivable Department are allocated to the two divisions based on the number of bills prepared. Kyle, the manager of the Business division, has complained that the allocated costs from Accounts Receivable are beginning to make the business division look unprofitable and has asked you to recommend some changes to the allocation system. If he agrees with your recommendation, he will pass them on to the chief financial officer.

Data on costs and activities in the Accounts Receivable Department follow.

The Accounts Receivable Department incurred the following costs during the year.

Under the current allocation system, what is the cost that will be allocated from Accounts Receivable to Personal? To Business?

a.

b. Suppose the company implements an activity-based cost system for Accounts Receivable with two activities, billing and dispute resolution. What is the cost that will be allocated from Accounts Receivable to Personal? To Business? Use the number of bills prepared as the cost driver for billing costs and the number of disputes for dispute resolution costs.

Samuelson and Messenger (SAM) began 2021 with 200 units of its one product. These units were purchased near the end of 2020 for $22 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased on January 19 for $30 each. Sales of 130 units and 130 units were made on January 10 and January 25, respectively. There were 240 units on hand at the end of the month. SAM uses a perpetual inventory system.

Required:
1. Complete the below table to calculate ending inventory and cost of goods sold for January using FIFO.
2. Complete the below table to calculate ending inventory and cost of goods sold for January using average cost.

Complete the below table to calculate ending inventory and cost of goods sold for January using FIFO.

Q: During a televised, title prize fight at a Las Vegas hotel, Luis threw a punch which hit Michael in the face. As a result:

a: This would ordinarily be an act of negligence, however since Michael consented to the fight, he has no viable legal action against Luis. INCORRECT

b: This would ordinarily constitute strict liability for engaging in an inherently dangerous activity, however since Michael consented to the fight, he has no viable legal action against Luis.

c: This would ordinarily be an action of intentional infliction of emotional distress, however since Michael consented to the fight, he has no viable legal action against Luis.

d: This would ordinarily be a battery, however since Michael consented to the fight, he has no viable legal action against Luis.

Problem 8-21 (Algorithmic)

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows:

Type I rooms do not have wireless Internet access and are not available for the Business rental class.

Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 140 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 40 rentals in the Business class. Round Tree has 125 Type I rooms and 135 Type II rooms.

1. Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types.
   

   Variable	# of reservations
   SuperSaver rentals allocated to room type I
   SuperSaver rentals allocated to room type II
   Deluxe rentals allocated to room type I
   Deluxe rentals allocated to room type II
   Business rentals allocated to room type II

2. How many reservations can be accommodated in each rental class?
   

   Rental Class	# of reservations
   SuperSaver
   Deluxe
   Business

A hotel has 100 rooms. On any given night, it takes up to 105 reservations, because of the possibility of no-shows. Past records indicate that the number of daily reservations is uniformly distributed over the range 96-105. That is, each integer number in this range has a probability of 10%, of showing up. The no-shows are represented by the distribution in the table below.

Based on your thirty simulations, determine the following measures of performance of this booking system: the expected number of rooms used per night and the percentage of nights when more than 100 rooms are claimed. (Show your simulations and any other information used in the analysis. Don’t send any worksheet.)

Scenario: Chief Complaint: Fever , AIDS. 40 year old white male resides at the hotel and lives on social security disability; diagnosed with AIDS, end stage, addiction, and agoraphobia presents with fever X2 weeks, no thermometer available, diarrhea daily. He tends to miss appointments because of his extreme anxiety in public places. He has not been on antiretroviral therapy due to his inability to regularly take medications. He is not in contact with case management, but there is a special hospice for homeless people with AIDS and perhaps it might be time to consider a referral for more supportive services.

Vital signs: 100/70 64 18 99.8 BMI:17   Gen: thin white male

skin: dry and flacking multiple nevi ruddy complexion, red flaky, rash on naso/ labial folds, and scalp + DANDROFF

HEENT:  Poor definition, gengevitus, shotty lymph nodes posterior / Anterior cervical.

Question: How would APRN (Nurse practitioner) prepare for home visit? Explore the practical concerns, the equipment APRN need to bring, and goals for the patient’s care.

Question: What might you want as Nurse practitioner to know from the case management and supportive services team?

Question: What specific things would you assess as Nurse practitioner at this visit?

Question: What are the essential elements of the history and physical today?

Question: What is your assessment as Nurse Practitioner ?

Question: What is your plan?

HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 20 properties with an average of 150 rooms in each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 70 percent, based on a 365-day year. The average room rate was $215 for a night. The basic unit of operation is the “night,” which is one room occupied for one night.

The operating income for year 1 is as follows:

In year 1, the average fixed labor cost was $416,000 per property. The remaining labor cost was variable with respect to the number of nights. Food and beverage cost and miscellaneous cost are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and other costs) are fixed for the firm.

At the beginning of year 2, HomeSuites will open six new properties with no change in the average number of rooms per property. The occupancy rate is expected to remain at 70 percent. Management has made the following additional assumptions for year 2:

The average room rate will increase by 8 percent.

Food and beverage revenues per night are expected to decline by 15 percent with no change in the cost.

The labor cost (both the fixed per property and variable portion) is not expected to change.

The miscellaneous cost for the room is expected to increase by 20 percent, with no change in the miscellaneous revenues per room.

Utilities and depreciation costs (per property) are forecast to remain unchanged.

Management costs will increase by 6 percent, and marketing costs will increase by 8 percent.

Other costs are not expected to change.

The managers of HomeSuites are considering different pricing strategies for year 2. Under the first strategy (“High Price”), they will work to maintain an average price of $285 per night. They realize that this will reduce demand and estimate that the occupancy rate will fall to 60.0 percent with this strategy. Under the alternative strategy (“High Occupancy”), they will work to increase the occupancy rate by lowering the average price. They estimate that with an average nightly rate of $194, they can achieve an occupancy rate of 80 percent. The current estimated profit is $75,358,035.

Required:

a. Prepare a budgeted income statement for year 2 if the “High Price” strategy is adopted. (Round your per unit average cost calculations to 2 decimal places.)

b. Prepare a budgeted income statement for year 2 if the “High Occupancy” strategy is adopted. (Round your per unit average cost calculations to 2 decimal places.)

c. Which is the correct pricing strategy for year 2.

A hotel has 8 air conditioners that each have a pre- determined area liberation rate. The carbon dioxide (COx) emission rates (in ppm) are measured for each. The pollution rate is expected to be a linear function of the area liberation rate.

(a) Write out the equation of the regression line. Interpret the slope and intercept in the context of this problem. Do they make sense? Include a scatter plot of the data with the correct regression line added.

(b) Test the hypothesis that the linear relationships exist between the predictor and response variable (ANOVA, t-test for β1, t-test for ρ, or a confidence interval for β1).

(c) What is the R2 for the SLR you have obtained? What does the value mean? Use it to evaluate the linear model.

(d) Plot the standardized residuals against the independent variable. What can you say about the regression using this graph? (HINT: Are there outliers? Does it seem reasonable to claim the data has a linear fit?)

HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 24 properties with an average of 200 rooms in each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 80 percent, based on a 365-day year. The average room rate was $220 for a night. The basic unit of operation is the “night,” which is one room occupied for one night.

The operating income for year 1 is as follows.

In year 1, the average fixed labor cost was $420,000 per property. The remaining labor cost was variable with respect to the number of nights. Food and beverage cost and miscellaneous cost are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and other costs) are fixed for the firm.

At the beginning of year 2, HomeSuites will open four new properties with no change in the average number of rooms per property. The occupancy rate is expected to remain at 80 percent. Management has made the following additional assumptions for year 2.

• The average room rate will increase by 10 percent.
• Food and beverage revenues per night are expected to decline by 25 percent with no change in the cost.
• The labor cost (both the fixed per property and variable portion) is not expected to change.
• The miscellaneous cost for the room is expected to increase by 30 percent, with no change in the miscellaneous revenues per room.
• Utilities and depreciation costs (per property) are forecast to remain unchanged.
• Management costs will increase by 5 percent, and marketing costs will increase by 5 percent.
• Other costs are not expected to change.

The managers of HomeSuites are considering different pricing strategies for year 2. Under the first strategy (“High Price”), they will work to maintain an average price of $230 per night. They realize that this will reduce demand and estimate that the occupancy rate will fall to 70.0 percent with this strategy. Under the alternative strategy (“High Occupancy”), they will work to increase the occupancy rate by lowering the average price. They estimate that with an average nightly rate of $190, they can achieve an occupancy rate of 90 percent. The current estimated profit is $259,025,200.

Required:

a. Prepare a budgeted income statement for year 2 if the “High Price” strategy is adopted.

b. Prepare a budgeted income statement for year 2 if the “High Occupancy” strategy is adopted.

c. Which is the correct pricing strategy for year 2.