In: Economics
Fixed cost are constant on both the total cost and per unit cost basis
| True | |
| False |
In: Accounting
Given:
Verizon
Total cost = $23 billion
Opportunity cost of capital = 10%
Annual cost = $2.3 billion
Expected demand = q = 2,100,000 – 6P
AT&T
Total cost = $4.6 billion
Opportunity cost of capital = 10%
Annual cost = $460 million
Expected demand = q = 425,000 – 60P
1. Calculate the expected annual profit that Verizon will earn if they price at service at $30/month, $60/month or $100/month. At which price do they maximize profit?
2. Calculate the expected annual profit that AT&T will earn if they price at service at $30/month, $60/month or $100/month. At which price do they maximize profit
In: Economics
Red Carpet LLC is a national hospitality and entertainment company with headquarters in Philadelphia, PA with national operations in the US. Historically, the company has had 3 divisions: hotels, food service, and cruise lines. However, it recently completed the acquisition of Sparkstar theaters, a movie theater company, that it is slated to become its 4th division. Red Carpet now owns 200 hotels in 48 states, 4 brands of restaurants with 1776 locations, 4 Buoy Bay branded cruise ships, and 300 Sparkstar theaters.
Its matrix organizational structure consists of a central HR, accounting, business development, sales, marketing, and research and development departments located at the headquarters in Philadelphia that serve each division. Each division is located in a different part of the US and lead by a VP that reports to the President and CEO. The company is privately owned by a consortium of investors and investor groups.
Red Carpet has 16,000 employees, 1000 of which work at its corporate headquarters. The organizational culture of the headquarters is informal and organic and there are few policies and processes that guide employee behavior. The company, as a whole, does not value HR so employees struggle with many employee relations and employment law concerns. The company outsources all of its training to one of the investor group companies, however this training is commonly not customized to the needs of Red Carpet.
As a whole, Red Carpet struggles with its business to business partners and suppliers because of its reputation for being nonnegotiable. Red Carpet would rather disrupt the quality and availability of its only products and services rather than partner for the supply chain resources that it needs. Likewise, Red Carpet does not hold many of the General Managers in its hotels, restaurants, and its cruise ships accountable for performance, opting instead for a weaker political strategy of blaming and gotcha games.
Being aware of these challenges, Red Carpet acquired Sparkstar for their strong industry reputation and financial performance in the hopes that merging the structure and culture of Sparkstar into Red Carpet would change the organization for the better. Historically, Red Carpet has been a highly successful company, however in recent years, its mismanagement has created noticeable effectives in product and service quality and its bottom line.
Divisions
Hotels: Red Carpet branded hotels are mid-price semi-luxury hotels known for high quality. Each customer is given a red velvet cupcake upon checking in. Red Carpet relies on its General Managers to micromanage the hotel. Despite its corporate parent owning a restaurant division, no Red Carpet hotels have restaurants. The Red Carpet division headquarters are in Sedona AZ. Many of the hotels are in need of refurbishment.
Food Service: Chicken Heaven is a fast-food chain with a long tradition of quality, large customer base, and 1000 locations. It is a solid overall performer for Red Carpet with high employee satisfaction. Burger Blast is another fast-food chain recently launched to cater to upscale customers who seek customized, gourmet-style burgers. It has 200 locations, however General Managers are struggling with budget and supplies causing a poor customer experience and high employee turnover. Food Park is a buffet-style restaurant with 500 locations that has been recently struggling because of high competition and poor marketing. Delicacy is a high-end restaurant with an urban theme. It has 76 locations, is the oldest of Red Carpet's food service operations, and provides a unique dining experience for customers. However, General Managers have a high turnover at Delicacy because of the grueling schedule. The food service division is located in Burke, ID.
Cruise Ships: Buoy Bay cruise ships offer low-cost, short-term cruises from Port Canaveral, FL only to the US Virgin Islands. Buoy Bay offers customers average quality staterooms and food from Chicken Heaven, Burger Blast, and Food Park. However, it does not offer a non-buffet formal dining option such as Delicacy. Although they are known for their over-the-top entertainment, employee turnover is very high relying primary on seasonal employees who are poorly trained. Buoy Bay has had much controversy. Just 5 years ago, the Buoy Bay cruise ship, Garland of the Sails, hit a reef, partially sank, and had to be salvaged in a 1.5 billion dollar operation. This resulted in a Federal investigation that is still pending. The Buoy Bay division is located in Lapsowanne, OR.
Movie Theaters: Sparkstar theaters were recently purchased from the Vegamega group for 2.3 billion dollars. Sparkstar is the highest rated movie theater chain the US. It has high customer and employee satisfaction, an efficient organizational structure, and solid financial results. Sparkstar's culture is one of high HR involvement including a strong training and development department, Sparkstar Institute. Sparkstar has a customer rewards program that provides a free movie rental of the film that the customer saw in the theater which has been very popular and has increased its strong customer base. Sparkstar has its divisional headquarters in Pasadena, CA.
The Issues
With the purchase of Sparkstar theaters, Red Carpet is hoping to redefine its operations in the next 5 years. It sees opportunities to integrate its divisions, products, and services to better serve its customers and employees. Here is a summary of some of the issues that Red Carpet must address in its strategic plan:
Internal politics and communication
Improved HR and training
Employee relations issues
Federal investigations
Product and service quality
Marketing support
Performance issues
Redefining the organizational structure
Improving its organizational culture
Integrating products and services
Resource and supply chain issues
Your Role
Leroy Banks, the Director of Change management at Red Carpet is seeking an Organization Development Consultant to address Red Carpet's need for change. You've just received a consulting contract from him to help prepare a plan to assist Red Carpet. You're excited about the opportunity and are motivated to work on this project. You know that your insight will assist Red Carpet with managing organizational change.
Leroy Banks is the Director of Change Management for Red Carpet, a national hospitality and entertainment company. He has contracted you to be an OD Consultant because Red Carpet has recently acquired a movie theater company and needs to create a new division. Leroy realized that this acquisition has provided an opportunity to restructure some other parts of the Red Carpet as well so it can streamline its operations. Leroy has asked you to begin by assessing Red Carpet’s organizational environment.
Review the Red Carpet scenario for this course and with your classmates; discuss the following questions that will help you become familiar with Red Carpet:
Identify and describe 3 examples of external forces affecting
Red Carpet.
Identify and describe 3 examples of internal forces affecting Red
Carpet
What challenges have these forces created at Red Carpet?
In: Operations Management
a large hotel chain, has been using activity-based costing to determine the cost of a night's stay at their hotels.
One of the activities, "Inspection," occurs after a customer has checked out of a hotel room.
Fitzgerald
inspects every
10th
room and has been using "number of rooms inspected" as the cost driver for inspection costs. A significant component of inspection costs is the cost of the supplies used in each inspection.
Dawn
McAdams,
the chief inspector, is wondering whether inspection labor-hours might be a better cost driver for inspection costs.
Dawn
gathers information for weekly inspection costs, rooms inspected, and inspection labor-hours as follows:
|
Week |
Rooms Inspected |
Inspection Labor-Hours |
Inspection Costs |
|---|---|---|---|
|
Week 1 |
260 |
85 |
$1,800 |
|
Week 2 |
328 |
129 |
2,560 |
|
Week 3 |
341 |
101 |
2,310 |
|
Week 4 |
437 |
142 |
2,850 |
|
Week 5 |
200 |
67 |
1,460 |
|
Week 6 |
245 |
80 |
1,750 |
|
Week 7 |
258 |
127 |
1,780 |
|
Week 8 |
331 |
146 |
2,260 |
Dawn
runs regressions on each of the possible cost drivers and estimates these cost functions:
Inspection
Costs=$246.60
+
($6.17
x Number of rooms inspected)
Inspection
Costs=$787.71
+
($11.94
x Inspection labor-hours)
|
1. |
Explain why rooms inspected and inspection labor-hours are plausible cost drivers of inspection costs. |
|
2. |
Plot the data and regression line for rooms inspected and inspection costs. Plot the data and regression line for inspection labor-hours and inspection costs. Which cost driver of inspection costs would you choose? Explain. |
|
3. |
Dawn expects inspectors to inspect306 rooms and work for124 hours next week. Using the cost driver you chose in requirement 2, what amount of inspection costs shouldDawn budget? Explain any implications ofDawn choosing the cost driver you did not choose in requirement 2 to budget inspection costs. |
In: Accounting
A random sample of ten households in College Park revealed they generated a mean of 10.91 pounds of garbage per week with a standard deviation of 4.736 pounds. Construct the 80% confidence interval to estimate the mean amount of garbage all College Park households generate per week
In: Statistics and Probability
Describe the two procedural differences in getting a bar charge to the front-office folio if:
In: Operations Management
One of the longest debates in accounting history is the issue of deferred taxes. The controversy began in the 1940s and has continued, even after the FASB issued Statement of Financial Accounting Standards No.109 [FASB ASC 740: Income Taxes] in 1992. At issue is the appropriate treatment of tax consequences of economic events that occur in years other than that of the events themselves.
Required:
1. Distinguish between temporary differences and permanent differences. Provide an example of each.
2. Distinguish between intraperiod tax allocation and interperiod tax allocation (deferred tax accounting) Provide an example of each.
3. How are deferred tax assets and deferred tax liabilities classified and reported in the financial statements?
In: Accounting
The catering manager of LaVista Hotel, Lisa Ferguson, is disturbed by the amount of silverware she is losing every week. Last Friday night, when her crew tried to set up for a banquet, they did not have enough knives. She decides she needs to order some more silverware, but wants to take advantage of any quantity discounts her vendor will offer.
>For a small order (2,000 pieces or less) her vendor quotes a price of $1.80/piece.
>If she orders 2,001 to 5,000 pieces, the price drops to $1.60/piece.
>5,001 to 10,000 pieces brings the price to $1.40/piece, and
>10,001 and above reduces the price to $1.25/piece.
Lisa's order costs of $205 per order, her annual holding costs are 5%, and the annual demand is 44,600 pieces. For the best option, (the best option is the price leve that results in an EOQ within the acceptable range).
A) What is the optimum ordering quantity?
B) What is the annual holding cost?
C) What is the annual ordering cost?
D) What are the annual cost of the silverware with an optimal order quantity?
E) What is the total annual cost, including ordering, holding, and purchasing the silverware?
In: Operations Management
Erica, the human resource manager, was frustrated by many of her hotel staff speaking Spanish in the hallways and rooms as they were cleaning them.
The Sawmill Hotel where Erica works is situated in Minneapolis, Minnesota’s downtown. It’s target market includes sports enthusiasts attending nearby professional (Twins, Vikings, Timberwolves, Wild) games but also business professionals and families. This four-star hotel features an indoor and outdoor swimming pool, message center, three stores, two restaurants, and a beauty shop. Total staff includes about 10 managers, 30 cleaning assistants to take care of rooms, 10 front desk specialists, and 25 who are involved with the stores, restaurants, and beauty shops. Each are required to focus on customer service as their number one value.
Erica hires everyone in the hotel except for the Chief Executive Officer, Vice President of Finance, and Vice President of Marketing. For the rest of the managers, the 30 cleaning assistants, store, restaurant, and beauty shop workers, she advertises for openings with the local job service and the Minneapolis Tribune (with the associated website). A typical Tribune ad for a cleaning assistant reads as follows: Cleaning Assistants Wanted, Sawmill Hotel, $9-11 hour, prepare rooms for customers and prepare laundry. Contact: Erica Hollie, Human Resource Manager, xxx-xxx-xxxx.
As a result of the advertising, Erica has been able to obtain good help through the local target market. Twenty seven of the thirty cleaning assistants are women. Twenty of the thirty have a Hispanic background. Of the Hispanics, all can speak English at varying levels.
Rachel, the lead cleaning assistant believes that maximizing communication among employees helps the assistants become more productive and stable within the hotel system. She uses both English and Spanish to talk to assistants under her. Spanish is useful with many assistants because they know Spanish much better than English. Spanish also is the “good friends” language that allows the Spanish speakers to freely catch up on each other’s affairs that motivates them to stay working at the hotel. The use of the Spanish language among cleaning assistants had been common practice among them for two years since the hotel opened.
In the last few months, top management decided to have an even greater focus on customer service by ensuring customer comment cards are available in each room and at the front desk. Customers also can comment about their stay at the hotel online.
There have been several customer complaints that cleaning assistants have been laughing about them behind their back in Spanish. One customer, Kathy, thought that staffers negatively commented about her tight pink stretch pants covering her overweight legs. Other customers have complained they didn’t think asking staff for help was easy given the amount of Spanish spoken. In all, about 15 out of 42 complaints in a typical month were associated with the use of the Spanish language.
Though Bellhops and front desk clerks are typically the workers who handle complaints first, Erica, the human resource manager, has the main responsibility to notify workers about customer complaint patterns and to set policy in dealing with the complaints. The prevalence of complaints concerning workers speaking Spanish each month led Erica to make a significant change in policy concerning the use of Spanish. In consultation with top management, Erica instituted the following employee handbook policy effective immediately:
“English is the main language spoken at the hotel. Any communication among employees shall be in English. Use of Spanish or other languages is prohibited unless specifically requested by management or the customer.”
In an e-mail explanation for the new policy, Erica stated the number of complaints that had come from the use of Spanish and the need for customer courtesy and communication.
Rachel immediately responded to Erica’s e-mail by stating that the new policy was too harsh on the native Spanish speaking assistants at the hotel. She thought that a better policy is to allow her assistants to communicate with each other through Spanish but by quietly doing so away from customer earshot. If there is a general discussion in front of a customer, it is recommended to speak English. There should never be discussions in any language about customer appearances.
Though Rachel grumbled, the policy stuck because Erica and top management wanted to stop customer complaints. As a result of the policy, ten of the twenty Spanish speaking assistants quit within two months. These were high quality assistants who had been with the hotel since the start. Their replacements came from a job service and have not worked out as well in their performance.
Questions and Answers
What law(s) do you think might apply in this case?
Should a complete ban of Spanish be instituted among staff of the hotel unless customers use Spanish themselves or should the use of Spanish be completely allowed by staff among themselves as long as it is quiet (why or why not)?
What rules, if any would you put into effect in this situation, knowing about the customer complaints? Explain your answer.
In: Operations Management