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HW-268 Phelps glass and Incentive Pay in the Hotel Ind
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Shipping: Australia: free (more destinations)
Condition: Used
Porb 18-22
Phelps Glass Inc. has reported the following financial data: net revenues of $10 million, variable costs of $5 million, controllable fixed costs of $2 million, noncontrollable fixed costs of $1 million,and untraceable costs of $500,000. The accounting manager has supplied you with this data andasked you to come up with the controllable margin, total contribution, CPC, and operating income.
Prob- 20-38
2. Incentive Pay in The Hotel Industry Ramon Martinez is the general manager of Classic Inn, a localmid-priced hotel with 100 rooms. His job objectives include providing resourceful and friendlyservice to the hotel s guests, maintaining an 80 percent occupancy rate, improving the average ratereceived per room to $88 from the current $85, and achieving a savings of 5 percent on all hotelcosts. The hotel s owner, a partnership of seven people who own several hotels in the region, wantto structure Ramon s future compensation to objectively reward him for achieving these goals. Inthe past, he has been paid an annual salary of $72,000 with no incentive pay. The incentive plan thepartners developed has each of the goals weighted as follows: Measure Percent of Total Responsibility Occupancy rate (also reflects guest service quality) 40%Operating within 95 percent of expense budget 25Average room rate 35100% If Ramon achieves all of these goals, the partners determined that his performance shouldmerit a bonus of $23,000. The partners also agreed that his salary would be reduced to $60,000because of the addition of the bonus.The goal measures used to compensate Ramon are as follows: Occupancy goal: 29,200 room-nights 80 percent occupancy rate 100 rooms 365 daysCompensation: 40 percent weight $23,000 target reward $9,200$9,200/29,200 $0.315 per room-night Expense goal: 5 percent savingsCompensation: 25 percent weight $23,000 target reward $5,750$5,750/5 $1,150 for each percentage point saved Room rate goal: $3 rate increaseCompensation: 35 percent weight $23,000 target reward $8,050$8,050/300 $26.83 per each cent increase Ramon s new compensation plan will thus pay him a $60,000 salary plus 31.5 cents per room-night sold plus $1,150 for each percentage point saved in the expense budget plus $26.83 per eachcent increase in average room rate Required
1. Based on this plan, what will Ramon s total compensation be if his performance results are a. 30,000 room-nights, 5 percent saved, $3.00 rate increase?
b. 25,000 room-nights, 3 percent saved, $1.15 rate increase?
c. 20,000 room-nights, 0 saved, $1.00 rate increase?
2. Comment on the expected effectiveness of this plan
Answer in excel.
Answer will be sent by email. It may take few hours to send the answer. You may email us if you have any query.
Phelps Glass Inc. has reported the following financial data: net revenues of $10 million, variable costs of $5 million, controllable fixed costs of $2 million, noncontrollable fixed costs of $1 million,and untraceable costs of $500,000. The accounting manager has supplied you with this data andasked you to come up with the controllable margin, total contribution, CPC, and operating income.
Prob- 20-38
2. Incentive Pay in The Hotel Industry Ramon Martinez is the general manager of Classic Inn, a localmid-priced hotel with 100 rooms. His job objectives include providing resourceful and friendlyservice to the hotel s guests, maintaining an 80 percent occupancy rate, improving the average ratereceived per room to $88 from the current $85, and achieving a savings of 5 percent on all hotelcosts. The hotel s owner, a partnership of seven people who own several hotels in the region, wantto structure Ramon s future compensation to objectively reward him for achieving these goals. Inthe past, he has been paid an annual salary of $72,000 with no incentive pay. The incentive plan thepartners developed has each of the goals weighted as follows: Measure Percent of Total Responsibility Occupancy rate (also reflects guest service quality) 40%Operating within 95 percent of expense budget 25Average room rate 35100% If Ramon achieves all of these goals, the partners determined that his performance shouldmerit a bonus of $23,000. The partners also agreed that his salary would be reduced to $60,000because of the addition of the bonus.The goal measures used to compensate Ramon are as follows: Occupancy goal: 29,200 room-nights 80 percent occupancy rate 100 rooms 365 daysCompensation: 40 percent weight $23,000 target reward $9,200$9,200/29,200 $0.315 per room-night Expense goal: 5 percent savingsCompensation: 25 percent weight $23,000 target reward $5,750$5,750/5 $1,150 for each percentage point saved Room rate goal: $3 rate increaseCompensation: 35 percent weight $23,000 target reward $8,050$8,050/300 $26.83 per each cent increase Ramon s new compensation plan will thus pay him a $60,000 salary plus 31.5 cents per room-night sold plus $1,150 for each percentage point saved in the expense budget plus $26.83 per eachcent increase in average room rate Required
1. Based on this plan, what will Ramon s total compensation be if his performance results are a. 30,000 room-nights, 5 percent saved, $3.00 rate increase?
b. 25,000 room-nights, 3 percent saved, $1.15 rate increase?
c. 20,000 room-nights, 0 saved, $1.00 rate increase?
2. Comment on the expected effectiveness of this plan
Answer in excel.
Answer will be sent by email. It may take few hours to send the answer. You may email us if you have any query.
