13. With the introduction of the Azure Majesty, Opulent Oceans will be able to improve their...

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13. With the introduction of the Azure Majesty, Opulent Oceans will be able to improve their bulk buying of food and drinks across all of their cruise ships. Without Azure Majesty, Opulent Oceans require 130 tonnes of food and drink per year where each kilogram costs $34/kg for all cruise ships. With Azure Majesty, each kilogram of food and drink will cost $32/kg for all cruise ships, this would bring the total food and drink for Opulent Oceans to 180 tonnes per year (where 50 tonnes of food and drink is required annually for Azure Majesty). In addition, Opulent Oceans will have to purchase additional insurance for the Azure Majesty at $970,000 per annum. 14. The NSW government also require that each cruise ship be equipped with a noise muffler which minimises the noise generated by the engine and other internal sources. Jenny mentions that Opulent Oceans already have an idle noise muffler stored in their North Sydney premises which could be used to operate the Azure Majesty. According to Jenny's records, the muffler was brought for $3.76 million and has been written off for tax purposes. Current market prices for the muffler are $966,000 and the muffler will be worthless 10 years from today. 15. The accounting team present the results of a benefit to cost analysis to Tim and project that Opulent Oceans will maximise their Azure Majesty investment over a 10 year horizon. In consultation with Mary, Tim decides that the plan is to sell Azure Majesty in 10 years' time. In order to preserve the value of the Azure Majesty, a regular three-year refurbishment is required, the first refurbishment occurs at the end of year 3 and costs $3.76 million, the second refurbishment costs $4.13 million and the third refurbishment costs $4.00 million. The refurbishment will replace the kitchens, bathrooms, bed mattresses and shops on board, and any miscellaneous items which are damaged due to wear and tear. As Azure Majesty will be unable to operate during the refurbishments, cash sales drop to 85% of the projected annual value in refurbishment years only and operating costs remain unchanged (with the exception of fuel, food and drinks costs for the Azure Majesty, which also drop to 85% of the projected annual value in refurbishment years only). The refurbishment costs can be claimed as a tax deduction. 13. With the introduction of the Azure Majesty, Opulent Oceans will be able to improve their bulk buying of food and drinks across all of their cruise ships. Without Azure Majesty, Opulent Oceans require 130 tonnes of food and drink per year where each kilogram costs $34/kg for all cruise ships. With Azure Majesty, each kilogram of food and drink will cost $32/kg for all cruise ships, this would bring the total food and drink for Opulent Oceans to 180 tonnes per year (where 50 tonnes of food and drink is required annually for Azure Majesty). In addition, Opulent Oceans will have to purchase additional insurance for the Azure Majesty at $970,000 per annum. 14. The NSW government also require that each cruise ship be equipped with a noise muffler which minimises the noise generated by the engine and other internal sources. Jenny mentions that Opulent Oceans already have an idle noise muffler stored in their North Sydney premises which could be used to operate the Azure Majesty. According to Jenny's records, the muffler was brought for $3.76 million and has been written off for tax purposes. Current market prices for the muffler are $966,000 and the muffler will be worthless 10 years from today. 15. The accounting team present the results of a benefit to cost analysis to Tim and project that Opulent Oceans will maximise their Azure Majesty investment over a 10 year horizon. In consultation with Mary, Tim decides that the plan is to sell Azure Majesty in 10 years' time. In order to preserve the value of the Azure Majesty, a regular three-year refurbishment is required, the first refurbishment occurs at the end of year 3 and costs $3.76 million, the second refurbishment costs $4.13 million and the third refurbishment costs $4.00 million. The refurbishment will replace the kitchens, bathrooms, bed mattresses and shops on board, and any miscellaneous items which are damaged due to wear and tear. As Azure Majesty will be unable to operate during the refurbishments, cash sales drop to 85% of the projected annual value in refurbishment years only and operating costs remain unchanged (with the exception of fuel, food and drinks costs for the Azure Majesty, which also drop to 85% of the projected annual value in refurbishment years only). The refurbishment costs can be claimed as a tax deduction.

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Answer Cost Savings Food and Drinks With Azure Majesty Opulent Oceans can buy food and drinks in bul... View the full answer