Case study (Group)

BIZ201 Assessment 4 Brief 20190710 Page 1 of 19

ASSESSMENT BRIEF

Subject Code and Title BIZ201 Accounting for Decision Making

Assessment Case Study Part B

Individual/Group Group (2-3 students)

Length 2,000 words

Learning Outcomes a) Explain and evaluate the role and importance of financial information in business decision making

b) Apply relevant accounting concepts to simple business scenarios

d) Apply basic costing and budgeting techniques to business decision making

e) Apply capital budgeting techniques to capital investment scenarios

Submission By 11:55 pm AEST/AEDT Thursday of Module 6 (Week 11)

Weighting 40%

Total Marks 100

Context:

This assessment is aimed at consolidating knowledge from Modules 1-6. By prescribing this

assessment, you are able to reflect on your understanding of the importance financial

information in business decision making and be able to apply costing and capital budgeting

techniques to business scenarios like given in this case study.

Instructions:

1. Submit two files; Excel Workbook and the Business Report. This Excel Workbook is

available on Blackboard under assessment section. Download it, perform calculations on

it and submit it.

2. Include a reference list to any textbooks, websites or other resources used to prepare

the answers including references to suppliers that the costing was based on.

3. For every task, show all workings through appropriate Excel formulas. Copy

pasted numbers without appropriate Excel formulas will not be accepted.

4. Unless otherwise instructed, round your numerical answers to two decimal places.

5. Submit your assessment files using the following naming convention:

First Name_Last Name_BIZ201_Case_Study B_ Assessment4_Workbook.xlsx

First Name_Last Name_BIZ201_ Case_ Study B_ Assessment4_Report.doc

BIZ201 Assessment 4 Brief 20190710 Page 2 of 19

Crystal Hotel Pty Ltd introduced in Part A of the Case Study has a quite flat organisational

structure as per the chart below. The General Manager oversees each departmental

manager directly.

You have been offered an internship opportunity as a group to show your skills and how you

could be of benefit to the organisation. At the end of the internship, there may be an

employment opportunity for the members of the group.

You need to choose as a group whether you would like to take on your internship in the

Sales and Marketing Department or Functions and Events Department.

Based on your choice, complete the section of the assessment related to the department

you have selected.

Crystal Hotel Case Study

General Manager

Executive Assistant Manager

Rooms Division

Human Resources

Accounting Sales and Marketing

Functions and Events

Food &Beverage

BIZ201 Assessment 4 Brief 20190710 Page 3 of 19

As per information provided in part A of the case study, the owners of the Crystal Hotel are

planning to renovate and refurbish the hotel. A part of the redevelopment plan is to build a

Wellness Centre on the rooftop of the hotel. The Sales and Marketing Manager volunteered

to help with this project. He is a strong believer that it would bring the hotel up to the next

level and that it would attract additional customers to the hotel.

Due to the location of the hotel being within proximity to the business district of

Parramatta, he believes that the Wellness Centre should be opened to external clients as

well. He suggests employing a full time, in-house trainer and a part-time dietician. He

believes selling monthly membership including training sessions and dietary advice will

attract additional clients who may then promote the hotel to their employers for

accommodation and other business-related services.

The marketing manager wants to be well prepared to support the Wellness Centre project

and needs help with few tasks from your team.

TASK 1

As part of the Wellness Centre Project, the plan is to build a small gym on the rooftop of the

hotel. You have been appointed to help the Sales and Marketing manager to make decision

whether to rent or buy specific equipment items. The required items are included in

Appendix 1 together with costing information. The budget for the required equipment is

$51,000 for the life of the equipment.

Regarding the buying of the equipment, the useful life is predicted to be 3 years after which

replacement is needed. At the end of its useful life, it is expected to be sold for the residual

value of 20% of its original cost. A servicing contract will be drawn up with a company to

take care of the equipment. Servicing will add 3% to the cost each equipment. This is to be

paid separately as one lump sum at the beginning of the term and will last 3 years.

For the renting option, choose the one that is the most beneficial for the business. The rent

is expected to rise by 10% each year. The rent is paid at the beginning of each period.

Servicing of the equipment is included in the rent.

REQUIRED

The manager would like to know whether it would be better for the Hotel to buy the

required equipment or to rent it. Explore both options and make a recommendation. Take

into account the time value of money at the discount rate of 7%. Include advantages and

disadvantages of each option and justify your choice.

Option 1 - Sales and Marketing Department Assessment

BIZ201 Assessment 4 Brief 20190710 Page 4 of 19

TASK 2

The Sales and Marketing Manager has an idea of creating monthly memberships for

external visitors that he would like to explore further. He is thinking to create two types of

membership options. A Basic Membership which would include access to the gym, sauna

and pool and it would cost clients $40 a week. A Full Package Membership would

additionally to the access include a one-hour weekly session with the in-house personal

trainer and a dietician consultation once a month. Clients would pay $81 per week for this

type of membership.

He believes that an initial investment into promoting the centre would be $53,373 and

subsequent cost of continuous promotion would be $808 per month.

Based on his calculations he believes offering the membership to the external clients would

generate total revenue of $151,000 in the first year increasing by 10% every year after that.

The in-house trainer is expected to cost the hotel $6000 per month and the services of

dietician additional $1700 per month and both are expected to increase by 4% each year.

REQUIRED

Calculate the net present value of the external membership project over the next 3 years

period. Use yearly basis for your calculations. The estimated cost of capital for the hotel is

7%. Assume 30% company tax in Australia when determining the values of the after-tax net

cash flow for each year.

Based on your analysis would you recommend accepting the project and offer the

membership to the external clients? Explain the basis for your recommendation.

TASK 3

Once the Crystal Hotel Wellness Centre is ready for opening, it will need to be promoted to

existing and potential new clients. There is already an opening event (luncheon) planned

which is handled by the Functions and Events Department. The overall budget for

promoting the opening of the centre is $35,000. The opening luncheon is budgeted to cost

$23,000.

Your team has been appointed to plan additional promotional activities for the remaining

$12,000. The budget is aimed for the promotion of the opening of the centre only.

Continuous promotional activities as well as online advertising will be handled separately.

The marketing team has done initial research and the promotional activities to be

considered are listed in the Appendix 3. Negotiated pricing has been included as well.

BIZ201 Assessment 4 Brief 20190710 Page 5 of 19

REQUIRED

Choose suitable promotional activities from the list provided to you and create a

promotional budget for the Crystal Hotel Wellness Centre opening. Justify your choice of

activities.

TASK 4

The GM has suggested Crystal Hotel to run a promotion to boost the occupancy rates of

the hotel. They aim to charge $120 per person for one night’s accommodation including

buffet breakfast. The variable cost per person is $35 that includes food, cleaning and

utilities. Fixed costs are $40,000 per year that include council rates rate, water rates and

land taxes. There are 100 rooms in the hotel and the hotel operates all year round. In

general, without any promotions, the normal occupancy rates are 70% throughout the

year.

REQUIRED

They have asked for your expertise to carry out a CVP analysis for this promotion. Calculate

the following:

1. The contribution margin per service (a unit of service is one night’s accommodation

for one guest).

2. The contribution margin ratio.

3. The annual break-even point in number of services and in dollars of service revenue.

4. The number of services required to earn a target net profit of $150,000 for the year

(ignore income taxes).

5. Analysis the importance of CVP analysis and comment on effectiveness of this

promotion based on your calculations.

6. Some of the marketing team suggest that the room charge for the promotion

should be raised to $150. Comment on whether this should be done and

what effect it will have on reaching the target profit.

BIZ201 Assessment 4 Brief 20190710 Page 6 of 19

TASK 1

As part of the refurbishment project, the Crystal Hotel would like to introduce fresh plants

into the lobby area, function and conference rooms. The management has however,

dilemma on whether to hire a professional company that will deliver the plants and

maintain them or whether to purchase the plants themselves and hire a gardener for the

maintenance of the plants. It is estimated that the plants would need to be replaced every

three years. From experience, contracting a gardener to take care of the plants would cost

the hotel $230 per week. For simplification, purposes assume the gardener’s invoice is

paid at the end of each year.

The list of the required plants together with costing is included in the Appendix 2 of this

document. The hiring contract requires payment at the beginning of the year for the full

year.

REQUIRED

Compare the two options and make recommendation to the Hotel on whether to hire or

purchase the plants. Take into account the time value of money at the discount rate of 8%.

Include advantages and disadvantages of each option and justify your choice.

TASK 2

As part of the improvement process, the hotel would like to invest into an event

management software package that would help to manage the events side of the business.

The hotel found a suitable software supplier. The software package will significantly

improve event management through streamlining processes and decreasing the time spent

on booking and quoting events. As a result of the capital investment, an increased revenue

and higher efficiency is expected regardless of the type of financing of the software

package. The expected useful life of the software package is three years.

Two payment options have been offered to the hotel. The first option is to pay a one-off

licence fee of $7,100 upfront and after that, an upgrade fee of $250 a year increasing by 4%

every year paid at the end of each year. The second option is a subscription fee of $250 per

month increasing by 3% each year paid at the end of each year, there is no upfront

payment.

REQUIRED

Compare the two options of financing the software package over the expected useful life of

the software. Make a recommendation on which option is financially better for the Hotel.

Option 2 - Functions and Events Department Assessment

BIZ201 Assessment 4 Brief 20190710 Page 7 of 19

Provide explanation for your recommendation. Take into account the time value of

money and the estimated cost of capital of 9% p.a.

TASK 3

As part of the promoting the Crystal Wellness Centre, your team has been appointed

to help to organise the Crystal Hotel Wellness Centre Opening Luncheon. The hotel is

expecting 300 guests to attend the event. Your team has been given a list of resources

that need to be outsourced that is included in the Appendix 4 of this document. The

Hotel Restaurant will provide the food and beverages and the price is included in your

list. Casual staff will be hired by the hotel at the rate given to you in the Appendix 4.

The Audio-Visual System and Staging are provided internally and do not need to be

budgeted for.

The rest of the required items will need to be outsourced. You are expected to find

suitable suppliers online and to complete the event costing. In terms of the

entertainment, your team needs to choose an appropriate supplier for this type of

event.

The gift hampers are to be given to the hotel’s long-term corporate clients.

Additionally, every visitor will receive a small promotional gift. While the event is

planned to last for three hours, the chair covers are required to be hired for 5 hours in

total. The overall budget for the resources listed is $16,000.

REQUIRED

Your task is to do an online search of appropriate suppliers in order to complete the

event costing. All calculations need to be included in the Excel Workbook and the

summary of the costing provided in the Business Report as well. Provide references to

the sources of the quotes and prices you have based the costing on. All costing must

be done from online resources without contacting suppliers directly as this task is

purely for the assessment purposes. Links to the supplies used need to be provided as

part of the reference list.

TASK 4

Crystal hotel has accepted a corporate meeting to take place in its conference room.

They are charging $120 per person that includes catering. The variable cost per

attendee is $40 that includes food, cleaning and utilities. Fixed costs of $20,000

include hiring some furniture and equipment from an outside vendor. The

conference facility can hold a maximum of 800 people and early projections suggest

it will be fully booked.

BIZ201 Assessment 4 Brief 20190710 Page 8 of 19

REQUIRED

They have asked for your expertise to carry out a CVP analysis for this meeting.

Calculate the following:

1. The contribution margin per service (a unit of service is one seat for one attendee).

2. The contribution margin ratio.

3. The annual break-even point in number of services and in dollars of service revenue.

4. The number of services required to earn a target net profit of $65,000.

5. Analysis of the importance of CVP analysis and comment on

effectiveness of this meeting based on your calculations.

6. The marketing team has suggested a gift bag be given to each attendee

at the end of the conference which will help promote a positive lasting

impression of the hotel. The gift bag will add an additional $5 per

person to the variable cost. Comment on the implications and make

recommendations for this suggestion keeping in mind the target profit.

BIZ201 Assessment 4 Brief 20190710 Page 9 of 19

A significant aspect of this assessment task is your ability to work and contribute to a team. It is recommended that before you even begin the actual work of the assessment, that your group define your working parameters. This involves establishing the:

Group Expectations: Roles and Responsibilities:

 Understanding the assessment task  Defining how much time is needed  Where and when the group will meet  What role each person will play  What assessment outcomes

participants are aiming for

 Facilitator – leads the discussion, making sure that all group members are contributing to the discussion.

 Scribe – takes notes from the meeting and sends them to all members

 Collator – pulls all the work together and submits

It is strongly advised that all team members work together to produce the final outcome. This means that everyone will:

 Perform all calculations and  Equally contribute to the written aspects

Along with your written submission, a separate Peer Evaluation Form will be completed by all group members. Your final scores on the assessment will be adjusted to reflect how you performed in your group. For example:

The Peer Evaluation Form must be completed individually and will not be disclosed to your team members. This form is to be sent to your Facilitator directly and not uploaded onto the learning portal.

Group Assessment Score

Peer Evaluation Feedback Score (0-100%)

Final Score

85% 0 – Fails to contribute or participate. Hinders the group process

0%

85% 50% - Some participation. Limit contribution. Carries some of the workload

42.5%

85% 100% - Full participation. Carries more than their share of load. Helps guide the team

85%

Teamwork

BIZ201 Assessment 4 Brief 20190710 Page 10 of 19

Title Page – including subject name, assessment title, group members names, date Executive Summary - An executive summary provides a succinct summary of the content within the report. It presents information in such a way that readers are able to understand the intention and key elements of the report without having to read the entire document. This section is not included in the word count Table of Contents – A summary of the sections and pages numbers Introduction - The introduction sets the scene and provides context for the aim. It provides background to the issues being addressed only Main Discussion – (Rename the headings/sub-headings to reflect your report). This section should provide information regarding the analysis you undertook addressing the key deliverables ie Tasks 1 – 4. Conclusion - The conclusion restates the aim then provides a brief and concise summary of the discussion to demonstrate that the aim of the report has been achieved. No new information is to be included in the conclusion Recommendations - Recommendations represent the next steps derived from the report. For example, if your report concludes that a new equipment is required to address for purchase then the next steps will include obtaining finance to purchase the new equipment and mobilising a team to explore options for layout, signage, instructions for use etc References - Please use the correct APA referencing style and list in alphabetical order. It is recommended that you use reference management software such as EndNote or Mendeley to make the job of referencing simple and straightforward. Remember, every factual statement in your report will require a reference. Click here for the - TUA referencing guide (you must be logged into the learning portal) Appendices - This is where you provide supporting material which is unsuitable for inclusion in the body of the report, but still has some value to contribute to the report.

As this is a group assessment, only one final copy needs uploading into the submission area. This is to be done by one person in each group.

Format

BIZ201 Assessment 4 Brief 20190710 Page 11 of 19

APPENDIX 1

GYM EQUIPMENT REQUIREMENTS

Treadmill

Quantity required: 4

Hire Price 3 months: $697

(per item) 6 months: $1141

12 months: $1970

Purchase Price

(per item): $6057

Elliptical Trainer

Quantity required: 3

Hire Price: 3 months: $379

(per item) 6 months: $555

12 months: $1010

Purchase Price

(per item): $4039

Exercise Bike

Quantity required: 5

Hire Price: 3 months: $351

(per item) 6 months: $530

12 months: $904

Purchase Price

(per item): $3332

Rowing Machine

Quantity required: 2

Hire Price: 3 months: $278

(per item) 6 months: $455

12 months: $838

Purchase Price

(per item): $2726

BIZ201 Assessment 4 Brief 20190710 Page 12 of 19

APPENDIX 2

PLANTS REQUIREMENTS

Zamioculca

Zamiifolia

(Zanzibar Gem)

Quantity required: 20

Hire Price

(per item)

12 months: $76

Purchase Price

(per item): $40

Raphis Excelsa

Hire Price

12 months: $275

Quantity required: 10 (per item)

Purchase Price

(per item): $136

Howea Forsteriana (Kentia Palm)

Quantity required: 10

Hire Price (per item)

12 months: $199

Purchase Price (per item): $57

Chamaedorea Elegans

(ParlourPalm) Quantity required: 30

Hire Price (per item)

Purchase Price (per item): $66

12 months: $218

BIZ201 Assessment 4 Brief 20190710 Page 13 of 19

APPENDIX 3

BIZ201 Assessment 4 Brief 20190710 Page 14 of 19

BIZ201 Assessment 4 Brief 20190710 Page 15 of 19

APPENDIX 4

Resources

Quantity

Chair Cover Hire - Black Lycra with Aqua & Hot

Pink Lycra Bands

300 pieces

Gift Hampers

10 pieces

Open Entertainment

3 hours

Balloon centrepieces

30 pieces

Guest Gifts

300 pieces

Food Based on $30.08 per person (GST NA) 300 people

Beverage based on $9 per person (GST NA)

300 people

AV system and staging

Provided internally

Event Staff Rate $22/hour GST Included in Rate

70 hours

BIZ201 Assessment 4 Brief 20190710 Page 16 of 19

APPENDIX 5

BIZ201 Assessment 4 Brief 20190710 Page 15 of 19

Learning Rubric: Assessment 4

Assessment Attributes

Fail (Unacceptable)

(0 - 49)

Pass (Functional)

(50 - 64)

Credit (Proficient)

(65 - 74)

Distinction (Advanced)

(75 - 84)

High Distinction (Exceptional)

(85 - 100)

Grade Description (Grading Scheme)

Fail grade will be awarded if a student is unable to demonstrate satisfactory academic performance in the subject or has failed to complete required assessment points in accordance with the subject’s required assessment points.

Pass is awarded for work showing a satisfactory achievement of all learning outcomes and an adequate understanding of theory and application of skills. A consistent academic referencing system is used and sources are appropriately acknowledged.

Credit is awarded for work showing a more than satisfactory achievement of all learning outcomes and a more than adequate understanding of theory and application of skills. A consistent academic referencing system is used and sources are appropriately acknowledged.

Distinction is awarded for work of superior quality in achieving all learning outcomes and a superior integration and understanding of theory and application of skills. Evidence of in-depth research, reading, analysis and evaluation is demonstrated. A consistent academic referencing system is used and sources are appropriately acknowledged.

High Distinction is awarded for work of outstanding quality in achieving all learning outcomes together with outstanding integration and understanding of theory and application of skills. Evidence of in- depth research, reading, and analysis, original and creative thought is demonstrated. A consistent academic referencing system is used and sources are appropriately acknowledged.

Understanding of buy or hire decisions in business

SLO addressed:

a) Explain and evaluate the role and importance of financial information in

Students have not

understood the concepts

of buy or hire decisions

and the written answers

provided are

unsatisfactory. Some or all

Excel formulas were

missing. Majority of values

were incorrect and wrong

Students have

demonstrated limited

knowledge of concepts of

buy or hire decisions.

Mistakes in Excel formulas

were present and some

formulas were missing. Due

to the mistakes, potentially

wrong conclusions have

been reached.

Students demonstrated some

knowledge of concepts of buy

or hire decisions in this

question. Correct conclusion

was made, however few

mistakes occurred in the

calculation process.

Students demonstrated

good knowledge of

concepts of buy or hire

decisions, Excel formulas

were provided, correct

recommendations were

reached and explanation

has been provided. Minor

mistakes in calculations

occurred but have not

Excellent knowledge and

practical application of

concepts of buy or hire

decisions in this task.

Students applied the time

value of money correctly,

provided all formulas in

Excel. The recommendation

regarding buy vs. rent

option has been correct

BIZ201 Assessment 4 Brief 20190710

Page 16 of 19

business decision making

b) Apply relevant accounting concepts to simple business scenarios

e) Apply capital budgeting techniques to capital investment scenarios

22%

conclusions have been

reached.

resulted in a wrong

decision.

and included detailed

explanation supported by

the analysis.

Understanding of different capital investment options for decision-making

SLO addressed: a) Explain and

evaluate the role and importance of financial information in business decision making

b) Apply relevant accounting concepts to

Students have not understood the two capital investment options and the written answers provided are unsatisfactory. Some or all Excel formulas were missing. Majority of values were incorrect and wrong conclusions have been reached.

Students demonstrated

limited understanding of

concepts of capital

investment options.

Mistakes in Excel formulas

were present and some

formulas were missing. Due

to the mistakes, potentially

wrong conclusions have

been reached.

Students demonstrated some

understanding of concepts of

capital investment options

covered in this question.

Correct conclusion was made,

however few mistakes

occurred in the calculation

process.

Students demonstrated

good understanding of

concepts of capital

investment options, Excel

formulas were provided,

correct recommendations

were reached and

explanation has been

provided. Minor mistakes in

calculations occurred but

have not resulted in a

wrong decision.

Excellent knowledge and

practical application of

concepts of capital

investment options covered

in this task. Students

applied the time value of

money correctly, provided

all formulas in Excel. The

recommendation regarding

the project is correct has

been supported by facts

and explained in detail.

BIZ201 Assessment 4 Brief 20190710

Page 17 of 19

simple business scenarios

e) Apply capital budgeting techniques to capital investment scenarios

22%

Development of activities for business with a budget provided

SLO addressed: a) Explain and

evaluate the role and importance of financial information in business decision making

b) Apply relevant accounting concepts to simple business scenarios

e) Apply capital budgeting techniques to capital

Minority of the promotional items or suppliers were suited to the task given. Excel formulas were missing. The template has not been used properly, the numbers are not adding up. Students went over budget.

Some promotional items

and suppliers were not

suited to the task given.

Excel formulas were

missing, but overall

template has been used

correctly. Many mistakes in

calculations have been

present; however students

were still within the budget

given to them.

Majority of the promotional

items and event suppliers

were suited to the task given.

Excel formulas have been

provided with minor

mistakes. Students were in

line with the financial

constrains given to them.

Majority of the promotional

items or event suppliers

were well suited to the task

given. Excel formulas have

been provided with minor

mistakes in calculations.

Students were in line with

the financial constrains

given to them.

Students have chosen appropriate promotional activities or event suppliers. Correct quantities were applied and appropriate costing or budget provided. Students were in line with the financial constrains given to them. All required references have been provided. All Excel formulas have been provided with no mistakes in calculations.

BIZ201 Assessment 4 Brief 20190710

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investment scenarios

22%

Cost- Volume-Profit Analysis

SLO addressed: a) Explain and

evaluate the role and importance of financial information in business decision making

b) Apply relevant accounting concepts to simple business scenarios

d) Apply basic costing and budgeting techniques to business decision making

22%

The importance and application of CVP analysis to scenario is missing. Excel formulas are missing. The template has not been used properly, the numbers are not adding up.

Importance of CVP and

application to scenario is

not suited. Excel formulas

are missing, but overall

template has been used

correctly. Many mistakes in

calculations are present.

Students have performed

majority of the required

calculations. Satisfactory CVP

analysis and application to

the scenario is performed.

Excel formulas have been

provided with minor mistakes.

Students have performed

majority of the required

calculations. Correct

formulas are applied.

Students are mostly aware

of the importance of CVP

analysis and are able to apply it to scenario. Excel formulas have been provided with minor mistakes in calculations.

Students have performed all the required calculations. Correct formulas are applied. Students are well aware of the importance of CVP analysis and are able to apply it to scenario. All required references have been provided. All Excel formulas have been provided with no mistakes in calculations.

BIZ201 Assessment 4 Brief 20190710

Page 19 of 19

Correct citation of key resources and evidence

Overall structure, appearance and referencing of the report are assessed

12%

Demonstrates inconsistent use of good quality, credible and relevant resources to support and develop ideas. Does not include correct references or in-text citations; does not use APA 6th style.

Uses sufficient sources, however can be greatly improved. Attempts to include references or in-text citations, however these are sometimes insufficient for research purposes, or incorrect; uses APA 6th style, however may contain some citation or referencing errors.

Shows good evidence of attempts to source information. Includes in-text citations and references from suitable sources; uses APA 6th style, however may contain minor citation or referencing errors.

Shows evidence of wide scope for sourcing evidence. Includes in-text citations and references from suitable sources; uses APA 6th style, containing minimal and or no errors.

Shows evidence of extensive scope for sourcing evidence. Includes in-text citations and references from suitable sources; uses APA 6th style, containing no errors.