Case Question 8-32 (Essay) It had been a quiet Monday morning for Anna Hogue, senior project manager at Flagstone Consulting. Everything seemed to be falling into place for the company's first conterence, "Healthcare Management in the New Millenium, scheduled for October 11 and 12 in Boston Then Ethan Tang, the staff consultant in charge of registration, stuck his head in the door. Anna said Ethan, I think we may have a problem with the co n erence. y 15 people have registered. Our marketing consultants told us to expect at east a 3% reg stration rate rom cur direct mail campaign. Based on the 5,000 con erence fliers we mailed, do another 135 peap will register in the next three weeks? Anna and E han had arked together to develop a budget for the conferenc , asfollows. They had budgeted for registration response rates a 2% 3% and 4%, but a response rat of 0.3% was far outside their expectations. ou think 2% Response Rate 3% Response Rate 4% Response Rate Total Per Attendee Total Per Attendee Total Per Attendee Registration fee revenue $59,500 $595 $89,250 595 119,000 $595 125 18,750 45 6.750 $125 25,000 $125 Conference materials Direct mail advertising Meeting room rental Equipment rental 5peaker fees: Speaker travel: Total expenses Operating income Anna hought for a second, and then replied Ethan, based on what he marketing firm told us, at least 75% of all registrations are rece ved a month before the conference. This response has me a bit worried. If \e need to cancel the conference, we must do it befure Thursday. Otherwise, it will be too late. Anna and Ethan called a couple of contacts at other organizations, who related similar experiences with law preconference registration. They indicated that medical professionals often wait until the last minute to register and that in some instances, conferences had been rescheduled and re-advertised to increase registration Anna and Ethan decided they needed more information before they could make a final decision on the fate of the conference. Rescheduling it would require them to confirm the new dates with the speakers. Conference facilities would also need to be secured for the new dates. Fortunately, the conference materials had not been sent to the printer yet, so the printed materials would not become obsolete, Anna and Ethan decided that If the conference were rescheduled, Flagstone would offer a reduced registration fee of $525 to companies that sent more than one person Anna called some of the Boston-area professionals who had expressed interest in the conference but had not registered yet. Some of them indicated that they had never received the registration mailing. After contacting the marketing firm about the matter, Anna learned that there had indeed been problems with the mailing. The marketing firm had subcontracted the mailing to a second firm, which could not verify that all the materials had been mailed. Anna wondered how many other prospects had not received the mailing. Next, Anna arranged a conference call with all the speakers, to explain what was going on. They agreed that the mailing problem could have contributed to the low registration. All the speakers were available on December 8 and 9, and were willing to change their schedules to accommodate Flagstone if the firm chose to reschedule the conference. Steve Smith indicated that he had already purchased a nonrefundable airline dicket for $800, If the conference were rescheduled, he would incur an additional $100 charge to change the f ight. william Townsley indicated that he was already scheduled to be in Boston on December 7, so Flagstone would not have to cover his travel expenses if the conference were rescheduled. Ethan called the University Parks Inn to discuss the fadilities contract. Although Flagstone had made no payments to the hotel yet, the special events coordinator reminded Ethan of two points in the centract: A cancellation fee of $10,000 would need to be paid if the conference were canceled at this late date. However, the inn would agree to waive the cancellation fee if the conference were rescheduled within four months of the original date. Flagstone had guaranteed a minimum of 40 guest rooms. If conference attendees booked fewer rcoms, Flagstone would have to pay an additional $5,000 for the meeting room rental. 2. Ethan also contacted the marketing firm about doing additional mailings. In light of the problems with the carlier mailing, the marketing fi rm offered to do two additional maiings for a total of $1,500. They also agreed to expand the mailing list to include several other prnressional organizations, as well as students at medical and nursing schools in h area. The firm estimated the new mailings would reach 6 5D pea e and snould result in a 2% registration rate Of that 2% 10% were expected to qualif for the reduced regis ration What alternatives are available to Anna and Ethan with regard to holding the conference? LINK TO TEXT What are the pros and cons of holding the conference as scheduled? LINK TO TEXT What are the pros and cons of canceling the conference? LINK TO TEXT What are the pros and cons of rescheduling the conference? LINK TO TEXT How should Flagstone view this conference-in the short term or in the long term? Exercise 6-25 (Essay) Carson Construction Consultants performs cement core tests in its Greenville laboratory. The following standard costs for the tests have been developed by the company's controller, Landon Carson, based on performing 2,100 core tests per month Standard Quantity Standard Cost Direct materials Direct labor Variable overhead Fixed overhead Total standard cost per test Standard Price $0.50 per pound $10 per DLH s9 per DLH $16 per DLH 4 pounds 5 DLH 5 DLH 5 DLH $2.00 5.00 4.50 8.00 $19.50 At the end of March, London reported the following operational results: . The company actually performed 2,250 core tests during the month. . 8,500 pounds of direct materials were purchased during the month at a total cost of $5,600 6,300 pounds of direct materials were used to conduct the core tests. . 850 direct labor hours were worked at a total cost of $9,775 . Actual variable overhead was $7,800 .Actual flxed overhead was $15,750. (h) Prepare a memo to Landon Carson providing possible explanations for the direct materials and direct labor variances. Prepare pro-forma income statements for each of the alternatives you identified in question (a). (Enter negative amounts using either a negative sign preceding the number e.g. -45. Do not leave any answer field blank. Enter o for amounts.) Option 1 Option 2 Option 3 Registration fee revenue 892 197 67 Direct mail advertising Meeting room rental Cancellation fee Guest room guarantee fee Equipment rental Speaker fees: 400 Speaker travel: ownsley Compton Total expenses Operating income Click if you would like to Show Work for this question: 1632 3604 Open Show Work Adjust the statements in part (b) by eliminating the unavoidable costs from the calculation to show only the relevant income/loss from each option. (Enter negative amounts using elther a negative sign preceding the number e.g. -45.) Relevant income (loss) Option 1 Option 2 s Option 3 Click if you would like to Show Work for this question: Open Show Work