BIZ201_Assessment 4 Brief_M6_Case Study Page 1 of 19 ASSESSMENT BRIEFSubject Code and TitleBIZ201 Accounting for Decision MakingAssessmentCase Study Part BIndividual/GroupGroup (2-3 students)Length2,000 wordsLearning Outcomesa) Explain and evaluate the role and importance offinancial information in business decision makingb) Apply relevant accounting concepts to simplebusiness scenariosd) Apply basic costing and budgeting techniques tobusiness decision makinge) Apply capital budgeting techniques to capitalinvestment scenariosSubmissionBy 11:55 pm AEST/AEDT Thursday of Module 6 (week 12)Weighting40%Total Marks100 Context:This assessment is aimed at consolidating knowledge from Modules 1-6. By prescribing thisassessment, you are able to reflect on your understanding of the importance financialinformation in business decision making and be able to apply costing and capital budgetingtechniques to business scenarios like given in this case study.Instructions:1. The facilitator will create a group of 2-3 students for this assessment. This assessmentshould be prepared as a group. One submission per group will be allowed. Themembers 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 StudyWorkbook Part B student.xlsx) including calculations and the Business Reportsummarising the tasks and recommendations. This workbook is attached underAssessment Information Section. You can download and work on it. All the calculationsshould 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 toprepare the answers including references to suppliers that the costing was based on.BIZ201_Assessment 4 Brief_M6_Case Study Page 2 of 194. For every task you are required to show all workings. The Excel Workbook shouldinclude formulas whenever appropriate. Copy pasted numbers with no workingsprovided are not acceptable.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.xlsxFirst Name_Last Name_BIZ201_ Case_ Study B_Group_Assessment4_Report.docBIZ201_Assessment 4 Brief_M6_Case Study Page 3 of 19Crystal Hotel Pty Ltd introduced in Part A of the Case Study has a quite flat organisationalstructure as per the chart below. The General Manager oversees each departmentalmanager directly.You have been offered an internship opportunity as a group to show your skills and how youcould be of benefit to the organisation. At the end of the internship, there may be anemployment opportunity for the members of the group.You need to choose as a group whether you would like to take on your internship in theSales and Marketing Department or Functions and Events Department.Based on your choice, complete the section of the assessment related to the departmentyou have selected.GeneralManagerRoomsDivisionHumanResources Accounting Marketing Sales and and Events Functions &Beverage Food ExecutiveAssistantManager Crystal Hotel Case StudyBIZ201_Assessment 4 Brief_M6_Case Study Page 4 of 19As per information provided in part A of the case study, the owners of the Crystal Hotel areplanning to renovate and refurbish the hotel. A part of the redevelopment plan is to build aWellness Centre on the rooftop of the hotel. The Sales and Marketing Manager volunteeredto help with this project. He is a strong believer that it would bring the hotel up to the nextlevel 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 Paramatta, 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 believesselling monthly membership including training sessions and dietary advice will attractadditional clients who may then promote the hotel to their employers for accommodationand other business related services.The marketing manager wants to be well prepared to support the Wellness Centre projectand needs help with few tasks from your team.TASK 1As part of the Wellness Centre Project, the plan is to build a small gym on the rooftop of thehotel. You have been appointed to help the Sales and Marketing manager to make decisionwhether to rent or buy specific equipment items. The required items are included inAppendix 1 together with costing information.The budget for the required equipment is $45,550 for the life of the equipment. The usefullife of the equipment is predicted to be 3 years after which it will need to be replaced. Atthe end of its useful life, it is expected to be sold for the residual value of 5% of its originalcost. 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 eachperiod. Servicing of the equipment is included in the rent price.Assume that servicing its own equipment will cost the hotel additional $600 every year overthe period of its useful life. Assume that servicing is done at the end of each year. IgnoreGST for the purpose of this assessment task.REQUIREDThe manager would like to know whether it would be better for the Hotel to buy therequired equipment or to rent it. Explore both options and make a recommendation. Takeinto account the time value of money at the discount rate of 8%. Base your decision on thetotal cost of the specified equipment, not on an item by item basis.Sales and Marketing Department AssessmentBIZ201_Assessment 4 Brief_M6_Case Study Page 5 of 19All 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 2The Sales and Marketing Manager has an idea of creating monthly memberships forexternal visitors that he would like to explore further. He is thinking to create two types ofmembership options. A Basic Membership which would include access to the gym, saunaand pool and it would cost clients $40 a week. A Full Package Membership wouldadditionally to the access include a one hour weekly session with the in house personaltrainer and a dietician consultation once a month. Clients would pay $81 per week for thistype of membership.He believes that an initial investment into promoting the centre would be $35,350 andsubsequent cost of continuous promotion would be $808 a month. At the beginning hewould like to make the service more exclusive and cap the membership to 20 basicmembership clients and 30 full package membership clients. He wants to create a feeling ofexclusivity amongst the clients.Based on his calculations he believes offering the membership to the external clients wouldgenerate 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 ofdietician additional $1515 and both are expected to increase by 3% each year.REQUIREDCalculate the net present value of the external membership project over the next 3 yearsperiod. Use yearly basis for your calculations. The estimated cost of capital for the hotel is8%. Assume 30% company tax in Australia when determining the values of the after tax netcash flow for each year.Based on your analysis would you recommend accepting the project and offer themembership to the external clients? Explain the basis for your recommendation.TASK 3Once the Crystal Hotel Wellness Centre is ready for opening, it will need to be promoted toexisting and potential new clients. There is already an opening event (luncheon) plannedwhich is handled by the Functions and Events Department. The overall budget forpromoting the opening of the centre is $35,350. The opening luncheon is budgeted to cost$20,200.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 19Initial research has been done by the marketing team and the promotional activities to beconsidered are listed in the Appendix 3. Negotiated pricing has been included as well.REQUIREDYour task is to choose suitable promotional activities from the list provided to you andcreate a promotional budget for the Crystal Hotel Wellness Centre opening. Use the budgettemplate provided in the excel file and adjust it as appropriate. Use Excel formulas tocalculate your values. The final budget is to be included in the business report as well.TASK 4Marketing team has suggested Crystal Hotel to run a promotion. They are charging $80 perperson 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 whichinclude council rates rate, water rates and land taxes.REQUIREDThey have asked for your expertise to carry out a CVP analysis for this promotion. Calculatethe following:1. The contribution margin per unit of service (a unit of service is one night’saccommodation 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 forthe year (ignore income taxes).5. Analysis the importance of CVP analysis and comment on effectiveness of thispromotion based on your calculations.BIZ201_Assessment 4 Brief_M6_Case Study Page 7 of 19TASK 1As part of the refurbishment project, the Crystal Hotel would like to introduce fresh plantsinto the lobby area, function and conference rooms. The management has howeverdilemma on whether to hire a professional company that will deliver the plants andmaintain them or whether to purchase the plants themselves and hire a gardener for themaintenance of the plants. It is estimated that the plants would need to be replaced everythree years. From experience, contracting a gardener to take care of the plants would costthe hotel $252 a week. For simplification purposes assume the gardener’s invoice is paid atthe end of each year.The list of the required plants together with costing is included in the Appendix 2 of thisdocument. The hiring contract requires payment at the beginning of the year for the fullyear.REQUIREDCompare the two options and make recommendation to the Hotel on whether to hire orpurchase 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 2As part of the improvement process, the hotel would like to invest into an eventmanagement software package which would help to manage the events side of thebusiness. The hotel found a suitable software supplier they are happy with. The softwarepackage will significantly improve event management through streamlining processes anddecreasing the time spent on booking and quoting events. As a result of the capitalinvestment, an increased revenue and higher efficiency is expected regardless of the type offinancing of the software package. The expected useful life of the software package is threeyears.Two payment options have been offered to the hotel. The first option is to pay a one-offlicence fee of $6,900 and an upgrade fee of $300 a year increasing by 3% every year. Thesecond option is a subscription fee of $181 per month increasing by 3% each year.REQUIREDCompare the two options of financing the software package over the expected useful life ofthe 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 onFunctions and Events Department AssessmentBIZ201_Assessment 4 Brief_M6_Case Study Page 8 of 19yearly basis. Take into account the time value of money and the estimated cost of capital of8% p.a.TASK 3As part of the promoting the Crystal Wellness Centre, your team has been appointed to helpto organise the Crystal Hotel Wellness Centre Opening Luncheon. The hotel is expecting 300guests to attend the event. Your team has been given a list of resources that need to beoutsourced which is included in the Appendix 4 of this document. The food and beverageswill be provided by the Hotel Restaurant and the price is included in your list. Casual staffwill be hired by the hotel at the rate given to you in the Appendix 4. The Audio VisualSystem 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 suitablesuppliers online and to complete the event costing. In terms of the entertainment, yourteam 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 forthree hours, the chair covers are required to be hired for 5 hours in total. The overall budgetfor the resources listed is $20,500.REQUIREDYour task is to do an online search of appropriate suppliers in order to complete the eventcosting. All calculations need to be included in the Excel Workbook and the summary of thecosting provided in the Business Report as well. Provide references to the sources of thequotes and prices you have based the costing on. All costing has to be done from onlineresources without contacting suppliers directly as this task is purely for the assessmentpurposes. Links to the supplies used need to be provided as part of the reference list.TASK 4Crystal hotel has accepted a corporate meeting to take place in its conference room. Theyare charging $100 per person which includes catering. The variable cost per attendee is $40which includes food, cleaning and utilities. Fixed costs are $10, 000 which include hiringsome furniture and equipment from an outside vendor.REQUIREDThey have asked for your expertise to carry out a CVP analysis for this meeting. Calculate thefollowing:1. The contribution margin per unit of service (a unit of service is one seat for oneattendee).2. The contribution margin ratio.BIZ201_Assessment 4 Brief_M6_Case Study Page 9 of 193. 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 forthe year (ignore income taxes).5. Analysis the importance of CVP analysis and comment on effectiveness of thismeeting based on your calculations.BIZ201_Assessment 4 Brief_M6_Case Study Page 10 of 19APPENDIX 1 GYM EQUIPMENT REQUIREMENTSTreadmillQuantity required: 3Hire Price 3 months: $697(per item) 6 months: $114112 months: $1970Purchase Price (per item): $6057Elliptical TrainerQuantity required: 2Hire Price: 3 months: $379(per item) 6 months: $55512 months: $1010Purchase Price (per item): $4039Exercise BikeQuantity required: 4Hire Price: 3 months: $351(per item) 6 months: $53012 months: $904Purchase Price (per item): $3332Rowing MachineQuantity required: 1Hire Price: 3 months: $278(per item) 6 months: $45512 months: $838Purchase Price (per item): $2726 BIZ201_Assessment 4 Brief_M6_Case Study Page 11 of 19APPENDIX 2 PLANTS REQUIREMENTSZamioculca Zamiifolia(Zanzibar Gem)Quantity required: 20Hire Price 12 months: $76(per item)Purchase Price (per item): $40Raphis ExcelsaQuantity required: 10Hire Price 12 months: $275(per item)Purchase Price (per item): $136Howea Forsteriana(Kentia Palm)Quantity required: 10Hire Price 12 months: $199(per item)Purchase Price (per item): $57Chamaedorea Elegans(ParlourPalm)Quantity required: 30Hire Price 12 months: $218(per item)Purchase Price (per item): $66 BIZ201_Assessment 4 Brief_M6_Case Study Page 12 of 19APPENDIX 3BIZ201_Assessment 4 Brief_M6_Case Study Page 13 of 19BIZ201_Assessment 4 Brief_M6_Case Study Page 14 of 19APPENDIX 4Resources QuantityChair Cover Hire – Black Lycra withAqua & Hot Pink Lycra Bands 300 piecesGift Hampers 10 piecesOpen Entertainment 3 hoursBalloon centerpieces 30 piecesGuest Gifts 300 piecesFood Based on $30.08 per person 300 peopleBeverage based on $9 per person 300 peopleAV system and staging Provided internallyEvent Staff Rate 22$/hour 70 hoursBIZ201_Assessment4 Brief_ Case Study_M6 Page 15 of 19Learning Rubric: Assessment 4 AssessmentAttributesFail (Unacceptable)(0-49)Pass(Functional)(50-64)Credit(Proficient)(65-74)Distinction(Advanced)(75-84)High Distinction(Exceptional)(85-100)GradeDescription(Grading Scheme)Fail grade will beawarded if a student isunable to demonstratesatisfactory academicperformance in thesubject or has failed tocomplete requiredassessment points inaccordance with thesubject’s requiredassessment points.Pass is awarded for workshowing a satisfactoryachievement of alllearning outcomes and anadequate understandingof theory and applicationof skills. A consistentacademic referencingsystem is used andsources are appropriatelyacknowledged.Credit is awarded for workshowing a more thansatisfactory achievement ofall learning outcomes and amore than adequateunderstanding of theoryand application of skills. Aconsistent academicreferencing system is usedand sources areappropriatelyacknowledged.Distinction is awarded forwork of superior qualityin achieving all learningoutcomes and a superiorintegration andunderstanding of theoryand application of skills.Evidence of in-depthresearch, reading,analysis and evaluation isdemonstrated. Aconsistent academicreferencing system isused and sources areappropriatelyacknowledged.High Distinction isawarded for work ofoutstanding quality inachieving all learningoutcomes together withoutstanding integrationand understanding oftheory and application ofskills. Evidence ofin‐depth research,reading, analysis, originaland creative thought isdemonstrated. Aconsistent academicreferencing system isused and sources areappropriatelyacknowledged.Understanding of buyor hire decisions inbusinessSLO addressed:a) Explain andevaluate therole andimportance offinancialinformation inStudents have notunderstood the conceptsof buy or hire decisionsand the written answersprovided areunsatisfactory. Some or allExcel formulas weremissing. Majority of valueswere incorrect and wrongconclusions have beenStudents demonstratedlimited knowledge ofconcepts of buy or hiredecisions. Mistakes in Excelformulas were present andsome formulas weremissing. Due to themistakes, potentially wrongconclusions have beenreached.Students demonstrated someknowledge of concepts of buyor hire decisions in thisquestion. Correct conclusionwas made, however fewmistakes occurred in thecalculation process.Students demonstratedgood knowledge of conceptsof buy or hire decisions,Excel formulas wereprovided, correctrecommendations werereached and explanation hasbeen provided. Minormistakes in calculationsoccurred but have notExcellent knowledge andpractical application ofconcepts of buy or hiredecisions in this task.Students applied the timevalue of money correctly,provided all formulas inExcel. The recommendationregarding buy vs. rentoption has been correct and BIZ201_Assessment4 Brief_ Case Study_M6 Page 16 of 19 businessdecisionmakingb) Apply relevantaccountingconcepts tosimple businessscenariose) Apply capitalbudgetingtechniques tocapitalinvestmentscenarios22%reached.resulted in a wrong decision.included detailedexplanation supported bythe analysis.Understanding ofdifferent capitalinvestment options fordecision-makingSLO addressed:a) Explain andevaluate therole andimportance offinancialinformation inbusinessdecisionmakingb) Apply relevantaccountingconcepts tosimple businessStudents have notunderstood the twocapital investment optionsand the written answersprovided areunsatisfactory. Some or allExcel formulas weremissing. Majority of valueswere incorrect and wrongconclusions have beenreached.Students demonstratedlimited understanding ofconcepts of capitalinvestment options.Mistakes in Excel formulaswere present and someformulas were missing. Dueto the mistakes, potentiallywrong conclusions havebeen reached.Students demonstrated someunderstanding of concepts ofcapital investment optionscovered in this question.Correct conclusion was made,however few mistakesoccurred in the calculationprocess.Students demonstratedgood understanding ofconcepts of capitalinvestment options, Excelformulas were provided,correct recommendationswere reached andexplanation has beenprovided. Minor mistakes incalculations occurred buthave not resulted in a wrongdecision.Excellent knowledge andpractical application ofconcepts of capitalinvestment options coveredin this task. Studentsapplied the time value ofmoney correctly, providedall formulas in Excel. Therecommendation regardingthe project is correct hasbeen supported by factsand explained in detail. BIZ201_Assessment4 Brief_ Case Study_M6 Page 17 of 19 scenariose) Apply capitalbudgetingtechniques tocapitalinvestmentscenarios22%Development ofactivities for businesswith a budget providedSLO addressed:a) Explain andevaluate therole andimportance offinancialinformation inbusinessdecisionmakingb) Apply relevantaccountingconcepts tosimple businessscenariose) Apply capitalbudgetingtechniques tocapitalinvestmentscenariosMinority of thepromotional items orsuppliers were suited tothe task given. Excelformulas were missing.The template has not beenused properly, thenumbers are not addingup. Students went overbudget.Some promotional itemsand suppliers were notsuited to the task given.Excel formulas weremissing, but overalltemplate has been usedcorrectly. Many mistakes incalculations have beenpresent; however studentswere still within the budgetgiven to them.Majority of the promotionalitems and event supplierswere suited to the task given.Excel formulas have beenprovided with minor mistakes.Students were in line with thefinancial constrains given tothem.Majority of the promotionalitems or event supplierswere well suited to the taskgiven. Excel formulas havebeen provided with minormistakes in calculations.Students were in line withthe financial constrainsgiven to them.Students have chosenappropriate promotionalactivities or event suppliers.Correct quantities wereapplied and appropriatecosting or budget provided.Students were in line withthe financial constrainsgiven to them. All requiredreferences have beenprovided. All Excel formulashave been provided with nomistakes in calculations. BIZ201_Assessment4 Brief_ Case Study_M6 Page 18 of 19 22%Cost- Volume-ProfitAnalysisSLO addressed:a) Explain andevaluate therole andimportance offinancialinformation inbusinessdecisionmakingb) Apply relevantaccountingconcepts tosimple businessscenariosd) Apply basiccosting andbudgetingtechniques tobusinessdecisionmaking22%The importance andapplication of CVP analysisto scenario is missing.Excel formulas are missing.The template has not beenused properly, thenumbers are not addingup.Importance of CVP andapplication to scenario isnot suited. Excel formulasare missing, but overalltemplate has been usedcorrectly. Many mistakes incalculations are present.Students have performedmajority of the requiredcalculations. Satisfactory CVPanalysis and application to thescenario is performed. Excelformulas have been providedwith minor mistakes.Students have performedmajority of the requiredcalculations. Correctformulas are applied.Students are mostly awareof the importance of CVPanalysis and are able toapply it to scenario. Excelformulas have beenprovided with minormistakes in calculations.Students have performed allthe required calculations.Correct formulas areapplied. Students are wellaware of the importance ofCVP analysis and are able toapply it to scenario. Allrequired references havebeen provided. All Excelformulas have beenprovided with no mistakesin calculations.Correct citation of keyresources and evidenceOverall structure,appearance andreferencing of theDemonstrates inconsistentuse of good quality,credible and relevantresources to support anddevelop ideas.Demonstrates use ofcredible and relevantresources to support anddevelop ideas, but these arenot always explicit or welldeveloped.Demonstrates use of highquality, credible and relevantresources to support anddevelop ideas.Demonstrates use of goodquality, credible andrelevant resources tosupport and developarguments and statements.Shows evidence of wideDemonstrates use of highquality, credible andrelevant resources tosupport and developarguments and positionstatements. Shows evidence BIZ201_Assessment4 Brief_ Case Study_M6 Page 19 of 19 report are assessed.12%scope within theorganisation for sourcingevidence.of wide scope within andwithout the organisation forsourcing evidence.
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