Managerial Accounting

2020 SUMMER TERM HBM491 BIB HOMEWORK 2 DUE DATE: This homework is due September 11, 2020 before 8am on eLearning. No other submission forms will be accepted. THIS IS AN INDIVIDUAL ASSIGNMENT! PLEASE NOTE THAT I INTENTIONALLY MAKE THESE PROBLEMS MORE DIFFICULT THAN THE PROBLEMS YOU WILL GET ON THE FINAL EXAM BECAUSE IF YOU CAN DO THESE PROBLEMS THEN YOU WILL NOT HAVE ANY TROUBLE DOING PROBLEMS ON THE EXAM. PROBLEM 1 (12 points) A 250-room hotel has an ADR of $120, annual fixed costs of $1’000’000, variable cost per room sold of $15 and average occupancy of 72%. Required: 1) Find contribution margin per room sold. 2) Find contribution margin ratio. 3) Find variable cost %. 4) Find break-even number of rooms sold (annual basis). 5) Find break-even occupancy %. 6) Find break-even revenue (annual basis). 7) Find total expenses at the break-even point (annual basis). 8) Find net income at the break-even point. 9) Find required level of revenue on annual basis and also required occupancy if required before-tax profit is $100’000. 10) Find required level of revenue on annual basis and also required occupancy If initial equity investment in the hotel was $2’500’000 and owners require an annual rate of return of 10% and tax rate is equal to 30%. PROBLEM 2 (3 points) A hotel has 2 departments: rooms and F&B. Room revenue last year was equal to $2’000’000 and that of F&B was equal to $1’000’000. Variable cost % for rooms is equal to 10% and that of F&B is equal to 45%. Total annual fixed costs for the entire hotel are $2’000'000. Required: 1) Find contribution margin ratio for rooms department, F&B department and the hotel as a whole, assuming constant revenue mix. 2) Find break-even level of sales for the entire hotel. 3) Find break-even occupancy % if the hotel has 250 rooms and ADR is $95. PROBLEM 3 (8 points) The following are some accounts pertaining to the rooms division of ABC Inn. Salaries and Wages 22 320 Operating Supplies 5 120 Sales 150 000 Laundry 8 000 Commissions 1 000

Dry Cleaning 300 Uniforms 200 Misc. expenses 100 Allowances for rooms department 2% of sales Fringe Benefits and Payroll Taxes 15% of salaries and wages Other Expenses 5% of sales Required: 1) Produce a rooms department schedule for ABC Inn. PROBLEM 4 (4 points) A 200-room hotel recorded an occupancy percentage of 65% with a $80.00 average room rate? The franchise fee for the hotel was based on the following fee structure: The initial fee is based on a minimum fee of $25,000 plus $120 per room in excess of 150 rooms. The hotel is required to pay a 4% of rooms revenue royalty fee, a 3% of rooms revenue reservation fee, a marketing fee of $0.60 per available room per day, and a $2.00 per occupied room frequent traveler fee (frequent travelers represent 20% of total rooms occupied). Required: 1) Find total franchise fee on a per available room basis. 2) Find total franchise fee as a percentage of rooms revenue. PROBLEM 5 (10 points) ABC Inn has recorded the following rooms sold figures for the previous 5 months of the current year. Month Rooms sold January 3000 February 3500 March 4000 April 4200 May 5000 Required: 1) Forecast rooms sold for the month of June using a 3-month moving average model. 2) Forecast rooms sold for the month of June using a 2-month moving average model. 3) Forecast rooms sold for the month of June using a 3 month weighted moving average with the following weights: Period Weight Previous 0.6 2-month before 0.3 3-month before 0.1 4) Forecast rooms sold for the month of June using the naïve method while taking into account all available date. 5) Using MAD, comment on the accuracy of the above models while citing their weaknesses and strengths.