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Hospitality Management Accounting 9th Edition Martin G Jagels, Catherine E Ralston - Solutions
Define the purpose of a petty cash fund.LO1
Explain the difference between a purchase order and a purchase requisition.LO1
A petty cash fund with a $200 limit had receipts of $152 and cash (coin and currency) of $43. Explain the status of the fund.LO1
Explain the purpose of a bank reconciliation.LO1
Explain the purpose of standard cost control.LO1
Identify to what standard food cost percentage is compared.LO1
Assuming total standard cost is $18,282 and total standard sales revenue is $48,487, determine the standard cost percentage.LO1
Assuming total actual cost is $18,480 and total actual sales revenue is$48,487, determine the actual cost percentage.LO1
Assume the same person handles all cash and checks received in payment of an account. Explain how lapping works. Using the following information showing the day in August each payment was received; determine the amount lapped on each day. Comment on how lapping can be prevented.LO1 Customer Name
A motel has established a petty cash fund of $100 that is controlled by the day shift desk clerk. During October, the following disbursements supported by receipts or memoranda were made from the fund. Calculate the amount of the reimbursement check to the fund at the end of October 0006.In the
Tavara’s Tavern reconciles its bank statement monthly. At the beginning of July, it found the following concerning the June reconciliation: The bank balance on the bank statement was $4,810, and the bank balance according to the tavern’s records was $5,112. Checks # 306 in the amount of $27, #
A hotel company reconciles its bank statement monthly. At the beginning of November, it found the following concerning the October reconciliation:The bank balance on the bank statement was $3,506, and the bank balance according to the company records was $4,740. Checks # 3581 and#3650 in the
A restaurant reconciles its bank statement monthly. The August 31 reconciliation showed the following: The restaurant’s bank balance is $4,112 and the bank statement balance is $2,760. Deposits in transit August 30,$456, and August 31, $1,212, have not yet been recorded by the bank.Checks #167
The bookkeeper who has worked for a small hotel for more than 30 years is retiring. Because he was such a reliable employee, he was given more and more responsibility over the years and did virtually all of the work, such as keeping all the accounting records, approving invoices for payment,
The owner of Charlene’s Restaurant believes that her food cost is higher than it should be. Charlene thinks that the problem might be in the receiving area and/or the dining area because she says she has good control over food in storage and production. She has asked you to see what you can
A restaurant has been in operation for the past five years and has successfully increased its sales revenue each year. One of the reasons is that in the third year the owner began extending credit to local businesspeople who regularly used the restaurant. They were allowed to sign their sales
A small hotel has an outside accountant prepare an income statement after the end of each month. For the last three months the amount shown as bad debts had increased considerably over any previous month. The owner asked the accountant to verify the authenticity of all accounts receivable written
At some of the banquets held in a hotel, the bar is operated on a cash basis.All drinks are the same price. Banquet customers buy drink tickets from a cashier at the door. The customers then present the tickets to the bartender to obtain drinks. The bartender will not serve any drink without a
A fast-food restaurant features only three entree items on its menu with the following cost and selling prices:a. For each item calculate the food cost percentage.b. If 50 of each item are sold each day, what will the standard food cost percentage be? What is the contribution margin in dollars?c.
The sales records for a coffee shop that has only six items on its menu show the following quantities sold during the month of January. Item standard cost and selling prices are also indicated.Actual cost of sales for the month of January was $11,885. Actual sales revenue for the month of January
A fast-food restaurant uses a standard cost approach to aid in controlling its food cost. The following are the standard cost, selling prices, and quantities sold of each of the five items featured on the menu during a particular week:Total actual cost for the week was $3,804.10 and total actual
Discuss the advantages and disadvantages of various traditional pricing methods used in the hospitality industry and understand the difference between long-range and tactical pricing.LO1
Explain the concept of using net income after tax as a cost.LO1
Calculate total annual revenue required for a restaurant operation to cover all forecasted costs including net income after tax and convert the annual revenue to an average check amount.LO1
Use existing information to calculate an average check per meal period and explain the effect that sales revenue mix of the various menu items will have on the average check.LO1
Discuss the considerations to be kept in mind when pricing a menu item and calculate seat turnover figures. Also discuss integrated pricing for a restaurant.LO1
Complete a menu engineering worksheet and discuss how to adjust the menu to respond to the results.LO1
Calculate an average room rate to cover all forecasted costs, including net income after tax, and convert the average rate to an average single and average double rate.LO1
Calculate room rates based on the square footage of a room.LO1
Discuss room rate discounting and calculate occupancy percentage for a discount grid. Calculate a potential average room rate and discounted rates for various market segments.LO1
Discuss some of the important considerations in pricing, such as the objectives of an organization, elasticity of demand, cost structure, and competition.LO1
Discuss the advantages and disadvantages of the three traditional pricing methods used by the hospitality industry.LO1
Differentiate long-run from tactical pricing and list four events that might necessitate tactical pricing.LO1
Explain why net income (after tax) can be treated as another cost of running a business operation.LO1
Explain how forecasted (budgeted) sales revenue for a hospitality operation can be used to determine an average check and an average room.LO1
If an average check was established to support a specific level of total sales revenue in a restaurant and the seat turnover rate becomes too low to support the desired total sales revenue, explain how the seat turnover needs to be changed.LO1
Define the term sales revenue mix and explain what influence it can have on an average check.LO1
What factors would a restaurant manager need to consider when establishing individual menu item prices?LO1
Explain why you do or do not think that the food cost percentage figure is important in menu pricing.LO1
In menu engineering, what are the two main factors about each menu item that are considered?LO1
In menu engineering, state what dogs are.LO1
Why is loss of sales revenue from hotel rooms not occupied on a given day more of a problem than loss of sales revenue from customers who did not show up in a restaurant on a given day?LO1
Explain briefly how a motel’s average room rate can be calculated or projected by using the bottom-up approach.LO1
If a hotel has an average room rate of $75, explain why every customer staying in the hotel will not pay this average rate.LO1
Describe how a double occupancy percentage for rooms is calculated.LO1
Of what value might it be to calculate hotel room occupancy by day of the week, or seat turnover in a restaurant by day of the week, rather than using an average weekly figure?LO1
Define the terms rack rate and potential average room rate.LO1
Define elasticity of demand and, using figures of your own choosing, show how a reduction in a hotel’s average room rate and the resulting change in total sales revenue would indicate an inelastic demand situation.LO1
State the equation for calculating elasticity of demand.LO1
What implications does the breakdown of a business’s costs into fixed and variable ones have on the pricing decision?LO1
Discuss the concept of product and/or service differentiation in a restaurant situation.LO1
Determine the operating income necessary to yield a net after-tax income of $56,000 using a current tax rate of 30%.LO1
Using information given in E6.1, identify the amount of income tax to be paid.LO1
If the total fixed and other identified operating costs are estimated to be$174,600 and all variable costs total 82% of total sales revenue, what is estimated total sales revenue?LO1
Average sales revenue of a restaurant with 90 seats for a month with a seat turnover of 2.7 and 26 operating days is $64,760. Determine the average check for the month.LO1
Using information from E6.4, determine the effect on the average check if seat turnover decreases from 2.7 to 2.0 times per day.LO1
A restaurant with 100 seats, serving both lunch and dinner 6 days per week, reported total annual sales revenue of $998,000. Dinner generates 68% of total sales revenue, with a seat turnover of 1.75. What is the average check for dinner?LO1
A rooms operation reported a total of 18,760 rooms sold, with a total of 23,450 guests in the previous year. What was the double occupancy rate?LO1
A small motel operation with 50 rooms has an average yearly occupancy rate of 74%. The forecasted sales revenue for the coming year is $842,712.What is the average room rate expected to be?LO1
Assume a rooms operation had 45 each, 220-square-foot rooms, and 25 each, 160-square-foot rooms with an average 70% occupancy for both types of rooms. Room sales revenue per day of $2,390 is required. Determine the rate to charge for each square foot.LO1
Using the following information, determine the average single and double room rates:LO1 Average rooms sold per day: 60 Average rooms double occupied: 24 Spread wanted between single and double room rates: $12.00 Average daily revenue: $2,988
You have the following projections about the costs in a family restaurant for next year:a. What sales revenue would the restaurant have to achieve next year in order to acquire the desired net income after tax?b. What is the required average check needed to achieve the annual sales revenue
A 25-room budget motel expects its occupancy next year to be 80%. The owners’ investment is $402,800. They want an after-tax return on their investment of 15%. Tax rate is 25%.■ Interest on a long-term mortgage is 10%. Present balance outstanding is $806,400.■ Depreciation rate on the
A restaurant has 90 seats. Total annual sales revenue for next year is projected to be $975,000. The restaurant is open 52 weeks a year and serves breakfast and lunch 6 days a week. Dinner is served 7 days a week. Seat turnover per day is anticipated to be 1.2 times for breakfast, 1.25 times for
A 140-seat dining room had a weekly customer count by meal period and day:a. For each meal period and for each day of the week calculate the seat turnover.b. Calculate the average number of customers per day and the average seat turnover for the week for each meal period.c. List some of the ways in
You have the following information about Beech Tree Café’s lunch menu with 10 entrées:Complete a menu engineering worksheet using the information given above. Exhibits 6.4 and 6.5 can be used as a guide. Discuss how you would adjust the menu.LO1 Number Sold (MM) Menu Item Menu Item Food Cost
An owner invested $180,000 in a new family-style restaurant, of which$160,000 was immediately used to purchase equipment and $20,000 was retained for working cash. Estimates for the first year of business are as follows:■ Menu selling prices to be established to give a markup of 150% over cost of
You have been given the following information about a hotel for the next year. The hotel has 40 rooms and expected occupancy rate of 70%. Rooms department, operating expenses, wages, supplies, laundry, and so on is 27% of room sales revenue.a. Calculate the hotel’s average room rate for next
A motel has 30 rooms and expects 70% occupancy next year. The owners’investment is presently $520,000, and they expect a 12% after-tax annual return on their investment. The motel is in a 24% tax bracket. The motel is carrying two mortgages: the first mortgage in the amount of$359,000 at a 10%
A 45-room resort hotel has three sizes of rooms, as follows:■ 15 singles at 150 square feet each■ 15 doubles at 220 square feet each■ 15 suites at 380 square feet each Occupancy is 80%. Demand for each type of room is about equal.The projected total sales revenue from rooms next year is
The Resolute Resort hotel currently operates at 75% occupancy, using a rack rate for all rooms of $60 and a marginal cost per room sold of $8.Calculate the occupancy figures for discount grid using discount percentages of 5%, 10%, 15%, and 20%.LO1
Motley Motel’s potential average room rate is calculated to be $62. Assume that this motel had three market segments. Vacation travelers use 75% of the room nights and are charged 100% of the rack rate. Business travelers use 15% of the room nights and are charged 90% of the rack rate. Sports
The Inviting Inn has 500 available guest rooms. For a certain week next month, the anticipated transient demand for rooms is as follows:The inn has the possibility of booking another group of 100 rooms for the nights of Tuesday, Wednesday, Thursday, and Friday of that week at a discounted rate of
Present in the proper form a comparative horizontal analysis of the corporate balance sheet shown below. Comment on any items of difference that you consider significant.LO1 Assets Current Assets Cash Year 0007 Year 0008 $ 11,300 $ 15,400 Credit card receivables 4,500 6,300 Accounts receivable
Using the information shown in P3.1, complete a common-size vertical balance sheet analysis in proper form for Year 0007 and Year 0008. Comment on any changes you consider significant.LO1
The following information has been extracted from a hotel’s food department for the months of August and September.a. For each sales revenue division, calculate the average check per guest for August and September.b. Calculate the average cost per guest and total average cost for each month.c.
A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B are as follows:The owners of the restaurants are concerned that restaurant B reports higher sales revenue, yet produces a lower operating income than restaurant
The sales revenue, food cost of sales, and guests served for a small fast-food carryout division of a restaurant for the past six months are given as follows:For each of the six months:a. Calculate average check and average costs of sales food.b. Using these averages, calculate a trend index
A motel had the following annual sales revenue and average room rate figures for the last five years. During this five-year period there were no changes in the number or type of rooms available and the clientele remained basically the same.a. Prepare room rate trend numbers from the average room
Two successive monthly income statements for the food department of a motor lodge are shown here. Present the income statements in a comparative horizontal analysis format and comment on any significant differences.LO1 Sales Revenue Room service Dining room Bar-lounge Coffee shop Banquets Total
Using the information presented in P3.7, present in proper format a common-size vertical income statement analysis. Comment on any significant results noted.LO1
You have the following information concerning a fast-food restaurant for three consecutive months.Convert the consolidated income statements to common size. Use the number of customers to prepare additional analyses. Comment on what is happening in this operation using the information you have
Freddy’s Fried Chicken provides the following for the months of April and May:Complete the following:a. Convert the income statement to common-size vertical analysis.b. Convert the income statement to a comparative horizontal analysis.c. With the information given, calculate the average check,
You have the following information about Hotshot Hotel’s dining room for the months of October and November. Calculate sales revenue average check, cost of sales, expenses and operating income on a per-guest basis.Use this information to comment about the dining room’s operating results for
You have the following information about the sales revenue, cost of sales, and accounts receivable for six consecutive periods for a small to midsize catering service. Generally, they are paid by check or cash and also extend 15-day accounts receivable credit to selected organizations.For each of
Assume that appropriate general trend index numbers for the catering service sales revenue and its food costs were as follows for the six periods referred to in P3.12.Convert the historic dollars of sales revenue and the historic dollars of cost of sales in P3.12 to current dollars and discuss the
A motel had the following annual sales revenue and average room rate figures for the last five years. During this five-year period, there were no changes in the number or type of rooms available, and the type of clientele remained the same.Prepare index numbers from the average room rates. Use the
Explain the differences between creditors, owners, and managers in what they look for in financial statements.LO1
Explain why creditors are normally concerned with specific areas of financial statements.LO1
List and briefly explain each of the current liquidity ratios discussed and illustrated.LO1
Explain the purpose of an analysis of credit card receivables.LO1
List and briefly explain each of the solvency ratios.LO1
List and briefly describe each of the profitability ratios.LO1
List and briefly explain each of the activity ratios.LO1
Discuss the importance of inventory turnover ratios.LO1
List and describe at least five food and beverage operating ratios.LO1
List and describe at least five rooms operating ratios.LO1
Explain the meaning of gross margin.LO1
Explain the difference between operating income and net income.LO1
Define financial leverage and explain why it is used.LO1
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