question no 1
Required information {The following information applies to the questions displayed below} Kristin Helmud is the general manager of Highland Inn, a local midpriced hotel with 100 rooms. Herjob objectives include providing resourceful and friendly service to the hotel's guests, maintaining an 80% occupancy rate, improving the average rate received per room to $91 from the current $87, achieving a savings of 5% on all hotel costs, and reducing energy use by 10% by carefully managing the use of heating and air conditioning in unused rooms and by carefully managing the onsite laundry facility, among other means. The hotel's owner, a partnership of seven people who own several hotels in the region, wants to structure Kristin's future compensation to objectively reward her for achieving these goals. In the past, she has been paid an annual salary of $75,000 with no incentive pay. The incentive plan the partners developed has each ofthe goals weighted as follows: Percent of Total Measure Responsibility Occupancy rate (also reflects guest service quality) 20% Operating within 95% of expense budget 36 Average room rate 36 Energy use 26 100% If Kristin achieves all of these goals, the partners determined that her performance should merit a bonus of $36,000. The partners also agree that her salary will need to be reduced to $63,000 because of the addition of the bonus. The goal measures used to compensate Kristin are as follows: Occupancy goat: 29,200 roomnights = 80% occupancy rate X 100 rooms I 365 days Compensation: 20% weight X $36,000 target bonus = $3,200 $3,200!29,200 = $0.2466 per roomnight Expense goaL: 5% savings Compensation: 30% weight X $36,000 target bonus = $10,800 $10,800/5 = $2,160 for each percentage point saved Room rote goat: $4 rate increase Compensation: 30% weight x $36,000 target bonus = $10,800 $10,300J400 = $27.00 for each cent increase Energy use goat: 10% savings Compensation: 20% weight X $36,000 target bonus = $3,200 $3,200f10 = $720 for each percentage point saved Kristin's new compensation plan will thus pay her a $63,000 salary plus 24.66 cents per roomnight sold plus $2,160 for each percentage point saved in the expense budget plus $27 for each centincrease in the average room rate plus $720 for each percentage point saved in energy use. The minimum potential compensation would be $63,000 and the maximum potential compensation for Kristin would be $63,000 + $36,000 = $99,000 L Required: 1. Based on this plan, what will Kristin's total compensation be if her performance results are {Round your answers 1.0 the nearest whole dollar amount} a. 30,000 roomnights, 5% saved, $4.00 rate increase, and 7'96 reduction in energy use? b. 27,000 room-nights, 3% saved, $2.15 rate increase, and 4% reduction in energy use?I :2. 30,000 roomnights, 0% saved, $2.00 rate increase, and 1% reduction in energy use? _ $ nTomempensation _ Total compensation _
