26815050 X Bb Microsoft Word - 9b12B014.doc> x Bb 32498685 X DE management.pdf sh/Documents/management.pdf + Page view A" Read aloud | Draw Highlight On Monday May 14, 2012, Justin McGregor, owner and manager of the Good Night Motel (Good Night), located at the north end of Grand Bend, Ontario, received a visit from George Alward. Alward was seeking accommodation for the delegates to a church convention on Friday and Saturday nights, October 26 and se parameters is a copyright viol 27, respectively. The number of rooms needed would fill Good Night for both nights. The idea of a full house at that time of year was exciting, but when Alward proposed a room rate of half the regular room rate, McGregor was taken aback and very reluctant to accept the business. Alward said he would be in the area for the next two days and would return tomorrow for a decision. He said the church convention was being held in Grand Bend at that time of year intentionally, because the motel and hotel business was so seasonal and rates would be much lower at this time of year. The church conference operated on a very limited budget and several attendees were being billeted in private homes and summer cottages. GRAND BEND Grand Bend was a summer resort town bordering Lake Huron, wherein all businesses in the area were Authorized for use only in the course Intro to Managerial Costing at Humber College Institute of Technology & Advanc exposed to highly seasonal business patterns. As such, many retail shops closed around the first of October. In the summer, it was estimated that 10,000 people lived in Grand Bend and many others arrived daily to enjoy the beach, the sun, the water and all the "action" offered with that environment. Grand Bend had a reputation as a party town, attracting primarily the 15- to 30-year-old demographic, who resided within a one to 1.5 hour drive to the town. THE MOTEL Location Highway 21 and Highway 81 intersected at Grand Bend's primary retail shopping district. The Good Night Motel was located on Highway 2r, three kilometers north of this main intersection. The motel was 15 years old, had 30 units, and was within walking distance of a family style restaurant that was open all year. The 15 .C P O DELL prt sc home end imprecr. debut fin insert F10 F11 F12 Dil F4 F6 F7 F9 F5 F8 + % & 3 O 5 6 8 1/2 3/4 2 1/4 U P R Y 9X Bb 26815050 X Bb Microsoft Word - 9b12B014.doc> x Bb 32498685 X PDE management.p ers/yogesh/Documents/management.pdf - + Page view A" Read aloud Draw His Page 3 9B12B014 During the summer months (June 15 to September 15), Good Night hired students from the nearby community college to take on the additional cleaning work - again, one student worked during the week and the other student worked on weekends, with the same hours and responsibilities as Driscoll and O'Toole. Check-out time was 11 a.m., but many times the rooms were vacated before 8 a.m., so Driscoll and O'Toole could easily spread the work over their shift. On rare days when everyone checked out close to 11 a.m., Driscoll and O'Toole were paid at a rate of one-and-a-half times their regular hourly rate for the extra time needed to clean and prepare the rooms for the next guests. When the motel was exceptionally busy, Driscoll would help with the laundry, On occasion, when the motel had an exceptionally good night in its Jason McArthur off season, Driscoll and O'Toole were available to help each other out with the cleaning The motel's employees were paid as follows: Jack Snelgrove $36,000 per year Mary Driscoll $16.00 per hour Sheila O'Toole $16.00 per hour Student summer employees $10.00 per hour THE DECISION A proposed rate of half the regular rate at Good Night, or $40 a night, was almost a clear "no thank you" decision from the start, especially since Good Night had operated slightly above its break-even point in 2012. Good Night's room rates and those of its competition are shown in Exhibit 1. See Exhibit 2 for the motel's income statement for fiscal 2012. Although McGregor knew Alward only slightly, he did know him to be a good man who was well respected in the community, and McGregor wanted to give the proposal, and to be seen to give the Humber College Institute of T proposal, a fair evaluation. McGregor was also reluctant to accept such a proposal because of the precedent it might set for future operations. O 15 DELL portsc home end DIL F8 imprecr. debut F10 fin 12 ins F4 F5 F9 % & + 6 8 3 0 1/4 1/2 E R T Y U P 8X Bb 26815050 X Bb Microsoft Word - 9b12B014.doc> x Bb 32498685 X DE managemer Users/yogesh/Documents/management.pdf + Page view A" Read aloud Draw A Student summer employees $10.00 per hour THE DECISION A proposed rate of half the regular rate at Good Night, or $40 a night, was almost a clear "no thank you" decision from the start, especially since Good Night had operated slightly above its break-even point in 2012. Good Night's room rates and those of its competition are shown in Exhibit 1. See Exhibit 2 for the motel's income statement for fiscal 2012. Although McGregor knew Alward only slightly, he did know him to be a good man who was well respected in the community, and McGregor wanted to give the proposal, and to be seen to give the proposal; a fair evaluation. McGregor was also reluctant to accept such a proposal because of the precedent it might set for future operations. O DELL prisc home end Imprecr. debut fin F3 DI F4 F6 F7 F8 F9 F10 F11 F12 % f A 6 9 3 1/4 1/2 E R T U O P con D G H KX Bb 26815050 X Bb Microsoft Word - 9b128014.doc> x Bb 32498685 X ODE management sers/yogesh/Documents/management.pdf + Page view | A" Read aloud | V Draw H Page 4 9B12B014 Exhibit 1 MOTEL RATES IN GRAND BEND 2012 June 15 to Balance of the September 15 Year Good Night Motel $ 95.00 $ 80.00 Other Independent Motels High End 95.00 80.00 Mid Range 80.00 69.95 Low End 69.95 49.95 Major Motel Chains 119.95 99.95 O DELL prtsc home end imprecr. debut fin F3 DII F4 F5 F6 F8 F9 F10 F12 # % f 4 5 6 8 9 0 1/4 1/2 E R T Y U O P con 9 D F G H KX Bb 26815050 X Bb Microsoft Word - 9b12B014.doc> X Bb 32498685 X DE management sers/yogesh/Documents/management.pdf + Page view A" Read aloud Draw Page 5 9B128014 Exhibit 2 INCOME STATEMENT For the year ended March 31, 2012 Room rental revenues $ 389,150 Operating expenses Management salaries 100,000 Maintenance salaries 36,000 Cleaning wages 34,180 Employee benefits 17,953 Cleaning and laundry supplies,2 12,070 Depreciation 54,700 Pool chemicals 2,350 Maintenance supplies and expenses 11,890 Utilities including Internet 74,850 Insurance and property tax 22,800 Interest expense and bank charges 19,180 Total operating expenses 385,973 Net Income $ 3.177 O W DELL prtsc home end imprecr. debut fin F3 F4 E6 F7 F8 F9 F10 F11 F12 # yo f 4 5 0 6 8 2 9 3 0 1/4 1/2 E R T Y U O P con D G H K O "