BIZ201 Accounting for Decision Making – Crystal Hotel

$12.00

BIZ201 Accounting for Decision Making – Crystal Hotel

Purchasing plant option will cost the crystal hotel $2062 on twenty pieces of Zamioculca
Zamiifolia, $3,505 on Raphis Excelsa, $1469 on Howea Forsteriana and finally $5,128 on
Chamaedorea Elegans. This gives a total of $12,138 over the three years. On the other hand,
hiring the plants will cost crystal hotel $3917 on twenty pieces of Zamioculca Zamiifolia,
$7087 on Raphis Excelsa, $5128 on Howea Forsteriana and finally $16854 on Chamaedorea
Elegans. This gives a total cost of 32,986 dollars. From the two options of acquiring the
plants, crystal hotel should chose the buying option. This option seems to be cheap taking into
consideration the time value of money. This option will save a total of 20,848 dollars over the
three years as compared to the renting option. This savings could be used in investment
purposes which can in turn give the hotel additional revenues leading to growth and
expansion.

Category:

Description

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

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. BIZ201 Accounting for Decision Making – Crystal Hotel.

Instructions:
1. The facilitator will create a group of 2-3 students for this assessment. This assessment
should be prepared as a group. One submission per group will be allowed. The
members of the group need to be clearly stated in the Business Report.
2. Two files have to be submitted, the Excel Workbook (AU – Crystal Hotel Case Study
Workbook Part B student.xlsx) including calculations and the Business Report
summarising the tasks and recommendations. This workbook is attached under
Assessment Information Section. You can download and work on it. All the calculations
should be done in Excel and only the final tables should be included in the report.
3. You should 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.

BIZ201_Assessment 4 Brief_M6_Case Study Page 2 of 19
4. For every task you are required to show all workings. The Excel Workbook should
include formulas whenever appropriate. Copy pasted numbers with no workings
provided are not acceptable. BIZ201 Accounting for Decision Making – Crystal Hotel.
5. Unless otherwise instructed, numerical answers should be rounded to 2 decimal places.
6. Submit your assessment files using the following naming convention:
First Name_Last Name_BIZ201_Case_Study B_ Group_Assessment4_Workbook.xlsx
First Name_Last Name_BIZ201_ Case_ Study B_Group_Assessment4_Report.doc

 

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 also that it would attract additional customers to the hotel.
Due to the location of the hotel being within a close proximity to the business district of Pa
ramatta, 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. BIZ201 Accounting for Decision Making – Crystal Hotel.
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 $45,550 for the life of the equipment. The useful
life of the equipment is predicted to be 3 years after which it will need to be replaced. At
the end of its useful life, it is expected to be sold for the residual value of 5% of its original
cost. From the renting options, choose the one that is the most beneficial for the business.
The rent is expected to rise by 3% each year. The rent is paid at the beginning of each
period. Servicing of the equipment is included in the rent price.
Assume that servicing its own equipment will cost the hotel additional $600 every year over
the period of its useful life. Assume that servicing is done at the end of each year. Ignore
GST for the purpose of this assessment task.
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 8%. Base your decision on the
total cost of the specified equipment, not on an item by item basis. BIZ201 Accounting for Decision Making – Crystal Hotel.

Sales and Marketing Department Assessment

BIZ201_Assessment 4 Brief_M6_Case Study Page 5 of 19
All calculations are to be done in Excel. Summarise your findings in the business report.
Include advantages and disadvantages of each option and explain your choice.
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 $35,350 and
subsequent cost of continuous promotion would be $808 a month. At the beginning he
would like to make the service more exclusive and cap the membership to 20 basic
membership clients and 30 full package membership clients. He wants to create a feeling of
exclusivity amongst the clients. BIZ201 Accounting for Decision Making – Crystal Hotel.
Based on his calculations he believes offering the membership to the external clients would
generate total revenue of $137,360 in the first year increasing by 10% every year after that.
The in-house trainer is expected to cost the hotel $5555 a month and the services of
dietician additional $1515 and both are expected to increase by 3% 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
8%. 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 $35,350. The opening luncheon is budgeted to cost
$20,200. BIZ201 Accounting for Decision Making – Crystal Hotel.
Your team has been appointed to plan additional promotional activities for the remaining
$15,150. 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.

BIZ201_Assessment 4 Brief_M6_Case Study Page 6 of 19
Initial research has been done by the marketing team and the promotional activities to be
considered are listed in the Appendix 3. Negotiated pricing has been included as well.
REQUIRED
Your task is to choose suitable promotional activities from the list provided to you and
create a promotional budget for the Crystal Hotel Wellness Centre opening. Use the budget
template provided in the excel file and adjust it as appropriate. Use Excel formulas to
calculate your values. The final budget is to be included in the business report as well.
TASK 4
Marketing team has suggested Crystal Hotel to run a promotion. They are charging $80 per
person for one night’s accommodation including breakfast. The variable cost per person is
$35 which includes food, cleaning and utilities. Fixed costs are $45, 000 per year which
include council rates rate, water rates and land taxes. BIZ201 Accounting for Decision Making – Crystal Hotel.
REQUIRED
They have asked for your expertise to carry out a CVP analysis for this promotion. Calculate
the following:
1. The contribution margin per unit of 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 units of service and in dollars of service revenue.
4. The number of units of service required to earn a target net profit of $ 100, 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. BIZ201 Accounting for Decision Making – Crystal Hotel.

BIZ201_Assessment 4 Brief_M6_Case Study Page 7 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 $252 a 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. BIZ201 Accounting for Decision Making – Crystal Hotel.
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%.
All calculations are to be done in Excel and summarised in the Business Report as well.
Include advantages and disadvantages of each option and explain your choice.
TASK 2
As part of the improvement process, the hotel would like to invest into an event
management software package which would help to manage the events side of the
business. The hotel found a suitable software supplier they are happy with. 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. BIZ201 Accounting for Decision Making – Crystal Hotel.
Two payment options have been offered to the hotel. The first option is to pay a one-off
licence fee of $6,900 and an upgrade fee of $300 a year increasing by 3% every year. The
second option is a subscription fee of $181 per month increasing by 3% each year.
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.
Provide explanation for your recommendation. All calculations are required to be made on

Functions and Events Department Assessment

BIZ201_Assessment 4 Brief_M6_Case Study Page 8 of 19
yearly basis. Take into account the time value of money and the estimated cost of capital of
8% 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 which is included in the Appendix 4 of this document. The food and beverages
will be provided by the Hotel Restaurant 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 $20,500. BIZ201 Accounting for Decision Making – Crystal Hotel.
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 has to 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 $100 per person which includes catering. The variable cost per attendee is $40
which includes food, cleaning and utilities. Fixed costs are $10, 000 which include hiring
some furniture and equipment from an outside vendor.
REQUIRED
They have asked for your expertise to carry out a CVP analysis for this meeting. Calculate the
following:
1. The contribution margin per unit of service (a unit of service is one seat for one
attendee).
2. The contribution margin ratio.

BIZ201_Assessment 4 Brief_M6_Case Study Page 9 of 19
3. The annual break-even point in units of service and in dollars of service revenue.
4. The number of units of service required to earn a target net profit of $ 50, 000 for
the year (ignore income taxes).
5. Analysis the importance of CVP analysis and comment on effectiveness of this
meeting based on your calculations. BIZ201 Accounting for Decision Making – Crystal Hotel.

Loader Loading...
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

Download [838.55 KB]

 

===================================================================================

 

BIZ201 Accounting for Decision Making – Crystal Hotel

Purchasing plant option will cost the crystal hotel $2062 on twenty pieces of Zamioculca
Zamiifolia, $3,505 on Raphis Excelsa, $1469 on Howea Forsteriana and finally $5,128 on
Chamaedorea Elegans. This gives a total of $12,138 over the three years. On the other hand,
hiring the plants will cost crystal hotel $3917 on twenty pieces of Zamioculca Zamiifolia,
$7087 on Raphis Excelsa, $5128 on Howea Forsteriana and finally $16854 on Chamaedorea
Elegans. This gives a total cost of 32,986 dollars. From the two options of acquiring the
plants, crystal hotel should chose the buying option. This option seems to be cheap taking into
consideration the time value of money. This option will save a total of 20,848 dollars over the
three years as compared to the renting option. This savings could be used in investment
purposes which can in turn give the hotel additional revenues leading to growth and
expansion. BIZ201 Accounting for Decision Making – Crystal Hotel.

or ORDER A CUSTOM PAPER