GB519 Measurement and Decision Making unit 6

Question
Directions:
Submit your assignment using a single Excel workbook. Place each exercise/problem on a separate tab (sheet).
You must properly format Excel for the Journal Entries. And, for any discussion component (as in Part 2 of Problem 20-38), “Insert” a Textbox and use that to present your discussion on the Excel spreadsheet.

BRIEF Exercise 18-22 – found on page 825 of your textbook:
Phelps Glass Inc. has reported the following financial data: net revenues of \$10 Million, variables cost of \$5 Million, controllable fixed cost of \$2 Million, non controllable fixed cost of \$1 Million, and untraceable cost of \$500.000. The accounting manager has supplied you with this data and asked you to come up with the controllable margin, total contribution, CPC, and operating income.

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Problem 20-38 – found on page 920-921 in the textbook
Ramon Martinez is the general manager of Classic Inn, a local mid-priced hotel with 100 rooms. His job objectives include providing resourceful and friendly service to the hotels guests, maintaining an 80 percent occupancy rate, improving the average rate received per room to \$88 from the current \$85, and achieving a savings of 5 percent on all hotel costs. The hotels owner, a partnership of seven people who own several hotels in the region, want to structure Ramon’s future compensation to objectively reward him for achieving these goals. In the past, he has been paid an annual salary of \$72,000 with no incentive pay. The incentive plan the partners 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 25
Average 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 days

Compensation: 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
Ramons 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 Ramons 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. 28,000 room-nights, 0 saved, \$1.00 rate increase?2.

Comment on the expected effectiveness of this plan

Pages (550 words)
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