EOC Week 10 My Plans

     Here we are, I'm pretty sure I am just ecstatic to even be in this situation. To think that I have a good chance at succeeding in this class means a lot to me. At the beginning of this quarter, I really did not think that I would get anything useful out of this course. Well, fast forward to now and I think I have a pretty good understanding at how accounting works in the hospitality industry. Looking at everything in hindsight, it seems that this quarter went by way too quickly. I went from being befuddled with the course material to actually getting an actual understanding with the subject. To be honest, I  really did not think that I would make it through this class, but somehow I managed to keep my head down and persevere through the adversity that I created for myself. I'm just glad that I at least know the basics to some degree. Frank is the real deal, that I can tell you. He genuinely cares about your success as a student and further on after graduation. What I mean about that is that he will go out of his way to make sure you do what you need to do. He is relentless with that, and for that I thank him. Now to say that I would actually open up my own business would be a long shot, but if I were to do that, well I have the basic understanding when it comes to the hospitality industry and accounting. With that knowledge in hand, I would know what I would have to do in order to keep the business afloat, right? To know what decisions would endanger me and my employees or which ones that would help us reap the fruits of our labor. With that being said, "You miss 100 percent of the shots you never take." - Wayne Gretzky

EOC Chapter 9 Question 3

1) If they decide to go the route of purchasing the restaurant, some fixed costs would be incurred. Those five; insurance, property tax, rent/mortgage, employee salaries and utilities. "A fixed cost is one that remains constant despite increases or decreases in sales volume (number of guests served or number of rooms sold)." (316)

2) To operate the restaurant, the variable costs would be; direct materials, commissions, production supplies, credit card fees and food costs. "A variable cost is one that increases as sales volume increases and decreases as sales volume decreases" (317)
3) Taking this into consideration, both decisions are very important. I think the flexibility of a good manager that is able to utilize variable costs far outweigh the options that are given with fixed costs. Lorelei can either reap the profits or watch the ship sink the restaurant.  "Good managers seek to decrease their fixed costs to their lowest practical levels while still satisfying the needs of the business and its customers. Those same good managers, however, know that increases in variable costs are usually very good!" (318) 

EOC Chapter 8 Question 4

a.    The total revenues for 10/2010 was 583,000. For 10/2009, they were 545,000. Food and beverage revenues typically make up the largest portion of a hotel’s non-room revenue. For those less familiar with the hotel business, it might seem that the pricing of a hotel’s food and beverage products would be identical to that of a restaurant (page 300).

b.  In 2009, the GOP dollars were 162,000. In 2010, the GOP dollars were 184,550.

c.    The  percentage of GOP to total revenues in 10/2009 were 29.72%. In 10/2010, they were 31.66%. Gross operating profit (GOP) is, in effect, total hotel revenue less those expenses that are considered directly controllable by management. Flow-through was created by managerial accountants to measure the ability of a hotel to convert increases in revenue directly to increases in GOP (Page 296).

d. The flow-through percentage achieved by the hotel was 59.34%. Seeing that the flow-through percentage was 9 percent above the 50 percent threshold, it shows that management is efficient in converting additional revenues into additional profits. Flow-through is computed to help managers identify the impact of increases in revenue on profitability. When it is high (over 50%), it usually reflects efficiency on the part of management in converting additional revenues into additional profits (Page 297).

EOC Chapter 6 Question 4

e. Based upon the dividend payout ratio only, what would you expect this company’s view to be regarding re-investing earnings back into the business versus paying them out in stockholder dividends?

f. Would you advise Tina to buy this stock? What additional information might you seek in order to help her make a good decision? Explain your answer.

Answers:  

 

E. The company should reduce the dividend payout to stockholders and increase the amount of money that is reinvested. However, that may affect the stock price, "if the company suddenly decreases the amount of dividends paid, then the stock price may fall." (208).

F. Tina should buy the stock, the current Payout ratio is high. If she does that, she should reconsider if the company decides to reduce the Payout. She should look deeper into the company's habits and find out how sturdy the company is. If she believes it is worth it, she should go for it. "The market price of the stock, is determined by the value that stockholders perceive the company’s shares are worth." (207).

EOC Chapter One Quiz 1.3

a. Is it legal? Yes, but at the same time, it seems pretty shady "Any course of action that violates written law or company policies and procedures is wrong." Managerial Accounting For the Hospitality Industry Figure 1.3 Page 20

b. Does it hurt anyone? Yes and no. Why? What the company doesn’t know won’t hurt them. At the same time, the salesperson went out of their way to compensate for the late deliveries. You can also run the risk of getting fired by your employer should anyone within the company finds out what was going on. "Is the manager accruing benefits that rightfully belong to the owner of the business? Discounts, rebates, and free products are the property of the business, not the manager." Managerial Accounting For the Hospitality Industry Figure 1.3 Page 20

   

c. Am I being honest? You’re not being honest with yourself if you do decide to take those hot dogs. You can actually tarnish your reputation if you get caught. With that being said, that is no good.

d. Would I care if it happened to me? That would be an emphatic yes! I wouldn’t want to be known for shady dealings. "A quick way to review the ethical merit of a situation is to consider whom you would tell about it." Managerial Accounting For the Hospitality Industry Figure 1.3 Page 20

 

e. Would I publicize my action? No, I would deal with the repercussions in house so none of this would go public.

f. What should be done with the two cases of hot dogs? The hot dogs would not have been accepted.