Hospitality Management Accounting 8th Edition Michael M. Coltman, Martin G. Jagels - Solutions

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What are your responsibilities to future generations? List important environmental benefits and detriments that have been passed to this generation by predecessors. List important environmental benefits and detriments that this generation will pass to future generations.
Do you feel that the world's population growth should be reduced and the world's population stabilized as soon as possible? What is an appropriate world population? What policies should be instituted to accomplish this?
Identify some important benefits and drawbacks of living in an advanced industrial country.
Do you think that sustainable development is as important or fundamental as is generally thought? Why?
"Sustainable development" has become a hot buzzword.Keep track of how many times you see or hear it over a oneweek period, and in what context.
Are you interested in a career in solid waste management?Why? Identify the federal, state/provincial, and local agencies that are responsible for solid waste management in your area. Which would you prefer to work for, and why?
What evidence is there that the human population has reached or surpassed the size where the world can accommodate it?
It is estimated that by 2025 there will be 93 cities in the world with populations exceeding 5 million. How will these cities manage their solid waste?
Arrange for a tour of your local landfill. What environmental impacts can you observe? What other environmental impacts are you aware of?
P14.7 In late January 2006, George Ray, president of Restoration Resort Ltd., is concerned about how he could finance the more than $200,000 he estimates he needs to convert, improve, and expand the company’s resort facilities. The resort has very little cash, and George and his wife have about
P14.6 The concierge’s department of a large hotel normally has a head concierge and nine concierges on duty during the day shift for the peak tourist months. During the past peak month, there have been far more than the normal number of guest complaints about the slow service received, creating a
P14.5 A small resort hotel that caters primarily to the family trade set as an objective an increase of 5 percent in its rooms occupancy over the next 12 months. Its strategy for achieving this was to convert some unused ground-floor storage space into a conference room that could seat about 30
P14.4 You are the manager of the maintenance department of a hotel. You are paid a basic salary, plus a bonus. The bonus consists of another $1,000 each time your expenses are under budget, plus 2 percent of the amount you are able to save. For the past six budget periods, the following are the
P14.3 Following are performance objectives for three different organizations:a. A restaurant’s manager: “To establish a position in the market by providing top-quality menu items created from the freshest locally grown produce.”b. Year-round recreational resort hotel’s marketing manager:
P14.2 The following paragraph appeared in a chain motel’s monthly in-house newsletter announcing the creation of a trophy that will be awarded to the motel with the most outstanding performance each year:The trophy will be given to the motel with the best combination of sales percentage increase
P14.1 Some hospitality enterprise entrepreneurs, even with limited education, have been successfully operating their businesses for many years. They have probably never heard of management by objectives (MBO). Their only goal is to work hard and make an adequate profit. In your opinion, and given
16. Briefly discuss two ways in which the effectiveness of a management information system can be determined.
15. Define management by exception and give an example of a circumstance where it might be used.
14. What are the main criteria for information so it is useful in the decisionmaking process?
13. Discuss how you think an information system should be judged for quality.
12. What are the four steps in the decision-making process?
11. Discuss the need for an action plan to achieve goals and differentiate between strategies and tactics.
10. Explain why a resort hotel that is the only one in the area would or would not be likely to practice social responsibility. Do you think such a resort hotel might act differently if it were only one of a number of competitive hotels in that area? Explain.
9. Define MBO and explain how it is used in an organization. What is goal congruence, and how does it fit in with MBO?
8. What is a secondary goal? Give an example that might be appropriate for the housekeeping department of a hotel.
7. Would the objective of no net income for a certain period (e.g., three years)be consistent with the goal of wealth maximization? Explain.
6. Explain why wealth maximization, as indicated by market price of shares, may not be achieved by profit maximization.
5. In what way might a policy to pay no dividends affect a hotel corporation’s market price of shares? If the policy were to pay out all net income in dividends, how might this affect the company’s future net income? How might this affect the future share price?
4. What is your understanding of the term satisficing?
3. Explain how you think a small restaurant operation can practice good financial management.
2. Briefly describe your understanding of the meaning of financial management.
1. Explain your understanding of a mission statement and state four purposes that it can serve.
9 Define management by exception.
8 Explain the ways in which information is obtained in an organization, list the main criteria for information to be useful in the decision-making process, and state how an information system should be judged for quality.
7 List the four levels in the decision-making process.
6 Discuss the role of strategies and tactics with reference to developing an action plan to achieve financial goals.
5 Discuss social goals.
4 Define MBO, explain how it is used to measure performance, and define the term goal congruence.
3 Discuss the pros and cons of wealth maximization as a financial goal.
2 Discuss the general concept of financial management and list the types of financial and other goals that a company might have.
1 Discuss the role of mission statements with reference to financial goals.
P13.7 Given the facts in Problems 13.4, 13.5, and 13.6, calculate the net annual cash flow figures for each of the five years. What would be your evaluation of the financial feasibility of this proposed motel?
P13.6 Given the facts in Problems 13.4 and 13.5 and the following additional information, prepare the pro forma income statements for each of the first five years:
P13.5 Given the facts in Problem 13.4, assume the building will be depreciated at 6 percent double declining balance, and that furniture and equipment will be depreciated at 25 percent double declining balance. Prepare depreciation schedules for the first five years. (Round calculated figures to
P13.4 A new 50-room budget motel is being planned. Total cost will be$1,450,000, of which land will be $150,000, building $900,000, furniture and equipment $300,000, and the balance for preopening interest and other expenses. The building will be financed 70 percent by an 8 percent mortgage for 21
P13.3 A financial feasibility study is being carried out for a proposed new 120-seat restaurant. It will be open for both lunch and dinner from Monday through Saturday and for dinner only on Sunday. For the sake of simplicity, assume a 52-week year. Seat turnover and average food check figures are
P13.2 Six competitive motor hotels have the following number of rooms and current occupancy rates?a. Calculate the current average occupancy of the six motor hotels.b. Calculate the composite rate of growth in demand.c. Apply the composite growth rate to the demand figures to obtain projected
P13.1 There are five competitive motels in a resort area with the following number of rooms and current occupancy rates:Motel Rooms Occupancy (%)A 74 82 B 45 73 C 58 85 D 48 70 E 52 75 Demand for rooms in the area is broken down into the following sources and growth rates:a. Calculate the current
11. If the initial feasibility of a proposed new hotel does not appear good from a financial point of view, what variables might one try to change to improve the result?
10. In what way might a change in the depreciation method used affect the projected cash flow figures in a feasibility study?
9. What adjustments generally have to be made to the net income figures to convert them to a cash flow basis?
8. In estimating total sales revenue for a coffee shop in a proposed new hotel, why is it important to begin by estimating sales revenue by meal period?
7. In preparing the pro forma income statement for a rooms department, how do you think the average room rate and occupancy figures could be established?
6. Two similar competitive restaurants have quite different levels of demand(average total number of customers per day). What factors could cause this to be so?
5. Briefly describe how a composite growth rate of demand for hotel rooms can be calculated.
4. A resort hotel is to be located in a mountain area near a major highway about 150 miles from the closest town or city. What sources of demand might you consider in a feasibility study for this property?
3. In preparing a feasibility study for a motor hotel to be located in an area where there are several other motor hotels, what factors would you consider to determine which of the other operations are the most competitive?
2. In a feasibility study for a restaurant in a downtown office building, what general market characteristics do you think would be relevant?
1. Since a feasibility study for a proposed new venture cannot guarantee that the venture will be successful, of what value is such a study?
6 Evaluate the financial analysis projections of a feasibility study.
5 Convert pro forma income statements to cash flow from given information.
4 Prepare pro forma income statements for rooms, food, and beverages from given information.
3 Calculate forecast rooms required from given demand information.
2 List and briefly discuss the four steps in hotel room supply and demand analysis.
1 Discuss the value of a feasibility study and the information included in its nonfinancial sections.
P12.11 A motel leases out its 1,000-square-foot coffee shop, although it continues to own the equipment. The lease is due for renewal. The motel could continue to rent the space for $2 a square foot per month for the next three years, and then $2.50 a square foot for the following two
P12.10 For many years, a motor hotel has been providing its room guests with room service of soft drinks and ice, using the services of a part-time bellhop to deliver to the rooms. Typically, the service has been losing money.The average figures for each of the past few years are as follows:
P12.9 Pizza Restaurant provides a delivery service and is considering purchasing a new compact vehicle or leasing it. Purchase price would be$13,500 (cash), which the restaurant has. Estimated life is five years.Residual (trade-in) value is $2,500.Under the purchase plan, the additional net cash
P12.8 You have to make a decision either to buy or to rent the equipment for your restaurant. Purchase cost would be $30,000. Of this amount,$7,500 would be paid cash now, and the balance would be owed to the equipment supplier. The owner agrees to accept $4,500 a year for five years as payment
P12.7 Pete’s Pizza is planning to purchase a new type of oven that cooks pizza much faster than the conventional oven now used. The new oven is estimated to cost $20,000 (use straight-line depreciation) and will have a five-year life, after which it will be traded in for $4,000. Pete has
P12.6 A restaurant operator wishes to choose between two alternative roll-in storage units. Machine A will cost $9,000 and have a trade-in value at the end of its five-year life of $1,500. Machine B will cost $8,500 and at the end of its five-year life will have a trade-in value of $700. Assume
P12.5 A hotel manager wishes to choose between two alternative investments giving the following annual net cash inflows over a five-year period The amount of the investment under either alternative will be $70,000.a. Using the payback period method, in which year, under both alternatives, will she
P12.4 Dinah, the operator of Dinah’s Diner, wishes to choose between two alternative investments providing the following annual net cash inflows over the five-year investment period:a. Calculate the payback time for each alternative, assuming an initial investment of $33,000 under each
P12.3 An investor is planning to open a new fast-food restaurant. He has a five-year lease on a property that would require an investment estimated at $205,000 for redecorating and furnishing. He would use his own cash. The present cost of capital (borrowed money) is 13 percent. Use this figure as
P12.2 Using the information provided in Problem 12.1, which would be the best investment using the payback period method? If the owner wanted her cash back in less than four years, should she invest in any of the machines?
P12.1 You have the following information about three electronic sales registers that are in the market. The owner of a restaurant asks for your help in deciding which of the three machines to buy.Income tax rate is 30 percent. Assume straight-line depreciation.a. Use the ARR method to decide which
E12.5 Assume an item of equipment is purchased at a cost of $22,500 to be paid for over five years, requiring a payment on principal of 20 percent per year at an annual interest rate of 10 percent. Complete a repayment schedule for each of the five years.
E12.4 What is the net present value of $2,125 for each year of two years with a discount factor of 0.8929 in year 1 and 0.7972 in year 2?
E12.3 Investment in an item of equipment is $18,000. It has a five-year life and no salvage value and straight-line depreciation is used. The equipment is expected to provide an annual saving of $2,000, which does not include depreciation. What is the payback period?
E12.2 Information is provided on two machines, which had an original cost of$25,800 for Machine X and $24,200 for Machine Y.Machine X Machine Y Net annual saving $1,440 $3,600 Add: Depreciation 4a. Which is the best investment using the payback period method?b. Will either of the machines provide
E12.1 Assume you are given the following information regarding a pointof-sale computer terminal: The net annual saving was calculated to be$2,000 on an average investment cost of $4,500. What is the accounting rate of return (ARR) on the terminal?
12. What factors, other than purely monetary factors, might one want to consider in a buy-versus-rent decision?
11. Landscaping for a resort hotel is an investment for which the benefits might be difficult to quantify. In what ways might you be able to quantify them?Even if investment analysis (for example, NPV) proved negative, what other considerations might dictate that the investment be made?
10. Under what circumstances might NPV and IRR give conflicting decisions in the ranking of proposed investments?
9. Contrast the NPV and the IRR methods of evaluating investment proposals.
8. If an investment requires an outlay today of $10,000 cash and, over the fiveyear life of the investment, total cash returns were $12,000, and the $12,000 had a present value of $9,500, would you make the investment? Explain.
7. In Exhibit 12.4, in the 11 percent column opposite year 5, is the number 0.5935. Explain in your own words what this number or factor means.
6. How would you explain discounted cash flow to someone who had not heard the term before?
5. Discuss the concept that money is worth more now than that same amount of money a year from now.
4. Under what conditions might a hotel consider buying an item of equipment with a rapid payback rather than one with a high accounting rate of return?
3. What is the equation for calculating the payback period? What are the pros and cons of this method?
2. How is the accounting rate of return calculated? What is the major disadvantage of using this method?
1. Discuss the ways in which long-term asset management differs from dayto-day budgeting.
8 Solve problems relating to the purchase versus the leasing of fixed assets.
7 Contrast the net present value and internal rate of return methods and explain how they can give conflicting rankings of investment proposals.
6 Use discounted cash flow tables in conjunction with the internal rate of return method to make investment decisions.
5 Use discounted cash flow tables in conjunction with the net present value method to make investment decisions.
4 Discuss the concept of the time value of money and explain the term discounted cash flows.
3 Give the equation for the payback period, use the equation, and state the pros and cons of this method.
2 Explain how the accounting rate of return is calculated, use the equation, and explain the major disadvantage of this method.

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Hospitality Management Accounting 8th Edition Michael M. Coltman, Martin G. Jagels - Solutions

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