Rotten Ronnie's is a pub located next to the campus of S.A.I.T. and serves as a gathering place for studious Hotel and Restaurant Management students. Ronnie sells beer on tap and all brands of bottled beer Ronnie is also considering selling hamburgers (a known post secondary staple for starving SAIT students) during selected hours. His reasons are twofold. First burgers would attract daytime customers (a beer and a hamburger are a quick lunch) and, second he has to meet the competition from Local Lou's, The Gateway and other local bars, some of which provide more extensive menus. Ronnie analyzed the costs as follows:

Beer: average contribution margin 0.75

extra beer sold per day 80

Monthly Fixed Expenses:

Wage of part-time cook 2,675

Other 1,450

Variable Expenses Per Hamburger:

Roll 0.19

Meat @ $6.40 per kilogram 0.80 (8 hamburgers per kilogram)

Other 0.36

Ronnie planned a selling price that he believes will lure in many customers. 2.75

Days in the month 30

Hamburgers sold ( part 3 ) 5,140

REQUIRED:

1- What are the monthly and daily break even points in number of hamburgers ?

2- What are the monthly and daily break even points in dollar sales ?

3- At the end of 2 months Ronnie finds he has sold several hamburgers. What is the operating profit per month on hamburgers ? ( see above for hamburgers sold )

4- Ronnie thinks that extra beers can be sold each day because he sells hamburgers. This means he anticipates that because of hamburgers sales he anticipates that his daily beer sales will increase as per above ( extra beer sold per day ). What effect will the additional beer sales have on monthly income ?

5-Refer to requirement 3. How many extras beers would have to be sold per day so that the overall effects of the hamburger sales on monthly operating income would be zero ?

Aggie Power Generation supplies electrical power to residential customers for many U.S. cities. Its main power generation plants are located in Los Angeles, Tulsa, and Seattle. The following table shows Aggie Power Generation's major residential markets, the annual demand in each market (in megawatts or MW), and the cost to supply electricity to each market from each power generation plant (in $/MW).

(a)

If there are no restrictions on the amount of power that can be supplied by any of the power plants, what is the optimal solution to this problem?

(i)

Which cities should be supplied by which power plants? (Enter your optimal solution as a comma-separated list of ordered triples for the amount of power each power plant supplies to each city. Report electrical power in MW.)

(L1, T1, S1), (L2, T2, S2), …, (L10, T10, S10) =  

(ii)

What is the total annual power distribution cost for this solution? (Round your answer to the nearest whole dollar.)

$

(b)

If at most 4,000 MW of power can be supplied by any one of the power plants, what is the optimal solution? (Enter your optimal solution as a comma-separated list of ordered triples for the amount of power each power plant supplies to each city. Report electrical power in MW. Round your answers to two decimal places.)

(L1, T1, S1), (L2, T2, S2), …, (L10, T10, S10) =  

What is the annual increase in power distribution cost that results from adding these constraints to the original formulation? (Round your answer to the nearest whole dollar.)

$

Benoit is opening a bed and breakfast inn in a popular beach resort town. He hopes to appeal to professional couples and retirees who want a high-end beach vacation experience but with a more home style experience – basically the experience of living in a luxurious beach house but with all the amenities of a high end hotel. Benoit’s B&B is directly on the beach and a few of the rooms have ocean views and in the evenings, from the front porch and from the beautifully landscaped back patio and pool area, the relaxing sound of the crashing of the waves can be heard. Benoit’s B&B has 15 bedrooms with private baths, a large dining area, and several stylish and comfortable lounging and reading areas on the main floor. He has two additional rooms on the main floor and one in the basement that are currently used for storage but could be developed into other amenities if the need arises. In addition to himself as owner, his staff (departments) will consist of a small kitchen staff, a cleaning crew, maintenance and lawn crew, and two managers. In order to attract the right type of clients and compete with the high-end boutique hotels, Benoit knows that he must make the experience at Benoit’s B&B an exceptional one. He has decided to implement a balanced score card to help each of the departments understand and implement his strategic plan.

Question 2

Part A:

In your own words, answer the following three questions as if the questions were asked of you by someone who knows nothing about the topic.

1. What is meant by sustainability?
2. What is corporate social responsibility reporting?
3. What are the 3 P’s and why are they sometimes referred to as the triple bottom line?

Part B:

We are currently in the middle of a global pandemic which has changed, at least temporarily, how business is conducted in most parts of the world. Write a paragraph or two to discuss how this pandemic might change a company’s approach to corporate social responsibility reporting. This should not be about the effects on one specific company rather it should be about broader implications of the pandemic impacting corporate social responsibility of corporations.

Where are the deer? Random samples of square-kilometer plots were taken in different ecological locations of a national park. The deer counts per square kilometer were recorded and are shown in the following table.

Shall we reject or accept the claim that there is no difference in the mean number of deer per square kilometer in these different ecological locations? Use a 5% level of significance.

(a) What is the level of significance?

State the null and alternate hypotheses.(from the following)
H_o: μ₁ = μ₂ = μ₃; H₁: At least two means are equal.

H_o: μ₁ = μ₂ = μ₃; H₁: Not all the means are equal.    

H_o: μ₁ = μ₂ = μ₃; H₁: Exactly two means are equal.

H_o: μ₁ = μ₂ = μ₃; H₁: All three means are different.

(b) Find SS_TOT, SS_BET, and SS_W and check that SS_TOT = SS_BET + SS_W. (Use 3 decimal places.)

Find d.f._BET, d.f._W, MS_BET, and MS_W. (Use 2 decimal places for MS_BET, and MS_W.)

Find the value of the sample F statistic. (Use 3 decimal places.)


What are the degrees of freedom?
(numerator)
(denominator)

(c) Find the P-value of the sample test statistic.

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis?
(e) Interpret your conclusion in the context of the application.

(f) Make a summary table for your ANOVA test.

“Are you familiar with STAR monthly trend reports?” asked Mark, the

outgoing RM at the newly refurbished Bradford Hampton Inn.

Mark was talking to Ja Lin, the newly hired RM for the property. Mark

was retiring, and the hotel’s GM had asked him to “show her the ropes”

on his last day of work and her first day.

“I think I understand them pretty well,” replied Ja Lin.

“That’s great” said Mark, “performance is really important here. But

you’ll really like the freedom you’ll have in this position. Our GM and

DOSM are so busy with sales and their own to-do lists that rate and

inventory management decisions will be pretty much left up to you.

Since the renovation, we have always led the comp set. Our RevPAR

index for the month is 119.5 percent. That makes us first again. I’m

really proud of that!”

Ja Lin reviewed the trend report document Mark had handed her to her.

The competitive set’s overall occupancy rate for the month was

61.5 percent. Her property’s occupancy index for the month was 140.9

percent. Its ADR index was 84.8 percent.“Of course, the owners always want more. Just between you and me, I’m

not sure they will ever be satisfied. They are always pushing for us to do

better,” continued Mark as he shook his head.

“Do better?” asked Ja Lin.

“Yes, better. You know. Make them more money. Honestly, I just don’t

think they are very realistic,” said Mark.

1. What do you think has been the rationale

behind Mark’s revenue management strategy?

2. Do you think the current strategy is in the long-term best interests

of the hotel’s owners? Explain.

3. What actions would you advise Ja Linto take to learn more about

her hotel’s relative placement within her competitive set and the

customer value her hotel delivers?

___ 1. Lester Company has a single product. The

selling price is $50 and the variable cost is $30 per

unit. The company’s fixed expenses are $200,000 per

month. What is the company’s unit contribution mar-

gin? a) $50; b) $30; c) $20; d) $80.

___ 2. Refer to the data for Lester Company in

question 1 above. What is the company’s contribution

margin ratio? a) 0.60; b) 0.40; c) 1.67; d) 20.00.

___ 3. Refer to the data for Lester Company in

question 1 above. What is the company’s break-even

in sales dollars? a) $500,000; b) $33,333; c) $200,000;

d) $400,000.

___ 4. Refer to the data for Lester Company in

question 1 above. How many units would the company

have to sell to attain target profits of $50,000? a)

10,000; b) 12,500; c) 15,000; d) 13,333.

___ 5. The following figures are taken from Park-

er Company’s income statement: Net income, $30,000;

Fixed costs, $90,000; Sales, $200,000; and CM ratio,

60%. The company’s margin of safety in dollars is: a)

$150,000; b) $30,000; c) $50,000; d) $80,000.

___ 6. Refer to the data in question for Parker

Company in 5 above. The margin of safety in percen-

tage form is: a) 60%; b) 75%; c) 40%; d) 25%.

___ 7. Refer to the data for Parker Company in

question 5 above. What is the company’s total contri-

bution margin? a) $110,000; b) $120,000; c) $170,000;

d) $200,000.

___ 8. Refer to the data for Parker Company in

question 5 above. What is the company’s degree of

operating leverage? a) 0.25; b) 0.60; c) 1.25; d) 4.00.

___ 9. If sales increase from $400,000 to

$450,000, and if the degree of operating leverage is 6,

net income should increase by: a) 12.5%; b) 75%; c)

67%; d) 50%.

___ 10. In multiple product firms, a shift in the

sales mix from less profitable products to more profit-

able products will cause the company’s break-even

point to: a) increase; b) decrease; c) there will be no

change in the break-even point; d) none of these.

Question No.3:                                                                                                                 {10marks}

Solve the following problems:

1. A person managing a dry-cleaning store for OMR 50,000 per year decides to open a dry-cleaning store. The revenues of the store during the first year of operation are OMR 150,000, and the expenses are OMR 40,000 for salaries, OMR 10,000 for supplies, OMR 13,000 for rent, OMR 2,000 for utilities, and OMR 5,000 for interest on the bank loan.

*Calculate:                                                                                                    

(a) The accounting profit, (1mark)

(b) The economic profit (1mark)

2. Mr. Ali owns and operates a small business that provides economic consulting services. During the year he spends OMR 60,000 on travel to clients and other expenses, and the computer that he owns depreciates by OMR 5,000. If he didn’t use the computer, he could sell it and earn yearly interest of OMR 100 on the money created through this sale. Mr. Ahmed’s total revenue for the year is OMR 110,000. Instead of working as a consultant for the year, he could teach economics at a small local college and make a salary of OMR 60,000.

1. What is Ahmed’s accounting profit? (1marks)
2. What is Ahmed’s economic profit? (2marks)

3. You are trying to decide whether to go to India on vacation or stay at home and work. If you work, you will earn OMR 15 per hour for the 42-hour workweek. If you go away, you will incur the following costs.
   • Airline ticket                 OMR 700
   • Hotel                            OMR 850
   • Meals                           OMR 500
   • Incidentals                    OMR 200

1. What are the implicit costs of going on the trip?(1 mark)
2. What are the accounting costs of going on the trip? (1 mark)
3. What are the economic costs of going on the trip? (1 mark)

4. The costs of attending the school of economics for one year are OMR 4, 250 for tuition, OMR 1400 for Reference books, OMR 950 for the Hostel room, and OMR 1200 for meals. As another opportunity, the student could earn OMR15, 000 by getting a job instead of going to university and, also, earn 5% interest by saving the money not spent on attending university.

*Calculate                                                                                                          

                 (a) Economic costs (2 marks)

Problem 13-59 (Static) Prepare Budgeted Financial Statements (LO 13-6, 7)

HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 15 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 70 percent, based on a 365-day year. The average room rate was $180 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 $400,000 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 three 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 5 percent.
• Food and beverage revenues per night are expected to decline by 20 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 25 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 8 percent, and marketing costs will increase by 10 percent.
• Other costs are not expected to change.

Required:

Prepare a budgeted income statement for year 2.

The following table shows age distribution and location of a random sample of 166 buffalo in a national park.

Use a chi-square test to determine if age distribution and location are independent at the 0.05 level of significance.

(a) What is the level of significance?


State the null and alternate hypotheses.

H₀: Age distribution and location are independent.
H₁: Age distribution and location are independent.H₀: Age distribution and location are not independent.
H₁: Age distribution and location are independent.    H₀: Age distribution and location are independent.
H₁: Age distribution and location are not independent.H₀: Age distribution and location are not independent.
H₁: Age distribution and location are not independent.

(b) Find the value of the chi-square statistic for the sample. (Round the expected frequencies to at least three decimal places. Round the test statistic to three decimal places.)


Are all the expected frequencies greater than 5?

YesNo    

What sampling distribution will you use?

uniformchi-square    normalbinomialStudent's t

What are the degrees of freedom?


(c) Find or estimate the P-value of the sample test statistic. (Round your answer to three decimal places.)

p-value > 0.1000.050 < p-value < 0.100    0.025 < p-value < 0.0500.010 < p-value < 0.0250.005 < p-value < 0.010p-value < 0.005

(d) Based on your answers in parts (a) to (c), will you reject or fail to reject the null hypothesis of independence?

Since the P-value > α, we fail to reject the null hypothesis.Since the P-value > α, we reject the null hypothesis.    Since the P-value ≤ α, we reject the null hypothesis.Since the P-value ≤ α, we fail to reject the null hypothesis.

(e) Interpret your conclusion in the context of the application.

At the 5% level of significance, there is sufficient evidence to conclude that age distribution and location are not independent.At the 5% level of significance, there is insufficient evidence to conclude that age distribution and location are not independent.    

Problem 2: You operate your own small building company and have decided to bid on a government contract to build a pedestrian walkway in a national park during the coming winter. The walkway is to be of standard government design and should involve no unexpected costs. Your present capacity utilization rate is moderate and allows sufficient scope to understand this contract, if you win it. You calculate your incremental costs to be $268,000 and your fully allocated costs to be $440,000. Your usual practice is to add between 60% and 80% to your incremental costs, depending on capacity utilization rate and other factors. You expect three other firms to also bid on this contract, and you have assembled the following competitor intelligence about those companies. Issue Rival A Rival B Rival C Capacity Utilization At full capacity Moderate Very low Goodwill Considerations Very concerned Moderately concerned Not concerned Production Facilities Small and inefficient plant Medium sized and efficient plant Large and very efficient plant Previous Bidding Pattern Incremental cost plus 35-50% Full cost plus 8-12% Full cost plus 10-15% Cost Structure Incremental costs exceed yours by about 10% Similar cost structure to yours Incremental costs 20% lower but full costs are similar to yours Aesthetic Factors Does not like winter jobs or dirty jobs Does not like messy or inconvenient jobs Likes projects where it can show its creativity Political Factors Decision maker is a relative of the buyer Decision maker is seeking a new job Decision maker is looking for a promotion Show all of your calculations and processes. Describe your answers in three- to five-complete sentences. a.What price would you bid if you must win the project? b.What price would you bid if you want to maximize the expected value of the contribution from this contract? c.Defend your answers with discussion, making any assumptions you feel are reasonable and/or are supported by the information provided.