Prince Rupert hotel has 20 rooms, and it charges guest $ 150 per room per night. The rate is same for the single or double bedroom. The hotel variable cost is $ 40 per occupied night.

Hotel opens every day for the year and has around 60% occupancy rate. Fixed Cost for the hotel is expected to be around $500,000.

There is an option to upgrade the hotel to 40 rooms. Doing so, Variable cost will remain constant, whereas Prince Rupert hotel will have increased Utilities. Additional utilities and other fixed cost will be an additional $ 450,000.

1. Calculate the breakeven no of nights and the margin of safety as a % if the hotel room is not upgraded.

2. Calculate the breakeven no of nights and the margin of safety (if any) if the hotel rooms are upgraded.

3. If the hotel purpose is to earn more operating profit, would it be beneficial to upgrade the hotel? Please show calculation to demonstrate your answer.

4. Assuming tax rate is 20%, and the hotel owners would like to earn $ 200,000 as net income, calculate the new occupancy rate should the hotel gets upgraded.

QUESTION 2: (20 marks)

Prince Rupert company manufactures product A. B, C and D. Data for the year ended Dec 31, 2021, is as follows.

Product	Units/ Production	Production run	Cost of material per unit ($)	Direct labour hours required per unit	Machine hours required per unit
A	20	3	80	2	1
B	40	4	60	5	8
C	45	6	70	7	5
D	120	12	65	9	3

Cost of Direct labor per hour: $ 6

Overhead costs for Prince Rupert company.

Set up cost	$ 12,000
Handling material cost	$ 6,000
Scheduling costs	$ 14,000

1. Using the peanut butter costing approach, calculate the cost per unit. (use Direct labor hours as a basis of allocation)
2. Using ABC Costing, calculate the cost per unit. Please justify why you choose that allocation base.
3. Show the difference of cost per unit using peanut butter and ABC costing.

QUESTION 3: (15 marks)

You are a management accountant at Prince Rupert company. Your line manager has given you to do variance analysis. The company sold 13000 units of product A, whereas it budgeted 12000 units. Actual revenue from the sales was $ 7,150 whereas it budgeted $ 42,000. Variable cost per unit was $ 20, whereas the company estimated $ 21. Budgeted Fixed Costs was $ 12,000 whereas the actual fixed costs were $ 14,000. Your manager has asked you the followings.

1. Your manager has asked you to prepare the flexible budget variance and sales volume variance.
2. Comment on your findings from question i. How can the manager use the variance analysis to make data driven decision?

QUESTION 4: (15 marks)

Imagine you are the management accountant at Tesla, electric car manufacturing company, and your boss has asked you to prepare Porters 5 forces for the North American region.

1. Prepare the Porter 5 forces analysis report. (Word count to be between 400 to 500 words).
2. Prepare a strategy map for Tesla.

QUESTION 5: (20 marks)

Prince Rupert fish company buys and sells fishes. The following is the report for Prince Rupert fish company. Diseased fish must be thrown away before it is sold

	June	July
Beginning inventory	0	2,200
Fishes caught	5000	3000
Diseased fishes	1200	700
Sold	1600	3,900
Variable cost
Processing cost per fish	6	6.5
Marketing cost per fish	2	1.9
Fixed Costs
Administrative cost	20,000	16,000

The selling price per fish is $ 35. Prepare the followings.

1. Statement of comprehensive income for June and July under variable costing and absorption costing.
2. Show the reconciliation between variable costing and absorption costing.
3. Why is there a difference in the cost between the variable costing and absorption costing?