This is a Hospitality managerial accounting. I am having a difficult time to finish it. The one blus letters is the one completed. I am taking the whole day to Find out the answer.

Chapter 3 pg 125-126 ETHICS SITUATION A restaurant manager has received a bonus for each of the past five years based on increases in sales revenue that have averaged about 5% over the previous year. The restaurant owner asked to have the sales revenue figures for the last five years adjusted for inflation and the manager had an accountant adjust the figures. On reviewing the results, the manager notices that sales revenues have remained virtually flat, and in one year, sales revenues actually declined slightly. Before submitting the adjusted figures to the owner, the manager decides to change them to show that sales revenue increases averaged approximately 3% a year. By changing the adjusted figures, the manager hopes to show the owner the annual bonuses were justified. Discuss the ethics of this situation. EXERCISES E3.1 A restaurant owner expressed concern about the changes in the cash, credit card receivables, and food and beverage inventories accounts in the months of July and August of the current year. He wants you to show him the dollar changes and the percentage of change for each of these accounts using comparative horizontal analysis. July August Cash $ 8,240 $ 6,592 Credit card receivables 1,480 2,398 Food inventories 4,680 6,506 Beverage inventories 2,880 2,448 Total Current Assets $17,280 $17,944 E3.2 Complete a commonsize vertical analysis for the months of July and August using E3.1's data. E3.3 Complete a commonsize vertical analysis of the following condensed income statement. Condensed Income Statement Sales revenue $482,000 Cost of sales ( 202,440) Gross margin $279,560 Operating expenses ( 207,400) Operating income 72,160 $ E3.4 A room's operation had an average room rate of $50.00 in the first year, $48.00 in Year 2, and $54.00 in Year 3. Establish a trend index starting with the average room rate for the first year and determine the index numbers for Year 1, Year 2, and Year 3. E3.5 Based on the following, determine the average check per guest. Sales Revenue Guests Dining room $150,080 9,380 Bar-lounge $ 68,050 5,444 E3.6 Based on the following, determine the average cost of sales revenue per guest. Cost of Sales Revenue Guests Dining room $51,522 9,040 Bar-lounge $38,642 6,222 E3.7 The following comparative current asset information has been extracted from a balance sheet for two successive years. Complete a horizontal analysis for Years 0007 to 0008, and a vertical commonsized analysis for Year 0008. Show the increase (+) or decrease () in dollars and the percentage of changes in the horizontal analysis. Current Assets Year 0007 Year 0008 Cash $10,000 $12,000 Credit card receivables 1,000 1,500 Accounts receivable 800 880 Food inventory 11,200 7,840 Prepaid expenses 3,300 4,620 Total Current Assets $26,300 $26,840 E3.8 The following data from a restaurant operation show a partially completed comparative income statement analysis for two consecutive years. Determine the missing dollar values and the missing percentages; show the plus (+) or negative () effects. Changes Year 0007 Year 0008 Dollars % Sales Revenue $23,502 $ +1,110 % Cost of sales revenue 9,208 9,438 +2.5% Gross Margin $ $ $ % Direct costs 10,202 +1,420 % Contributory Income $ $3,552 Indirect costs 2,477 3.0% Operating Income $ $1,149 $ % E3.9 Sales revenue for a restaurant operation is given for the months of March, April, and May of Year 0007. The index numbers are stated for each month. Convert March, April, and May to current dollars. Round answers to the nearest dollar. Year 0007 Sales Revenue Trend Index Number March $48,000 110.0 April $50,000 112.0 May $52,000 (Jagels 124127) 115.0 Jagels, Martin G. Hospitality Management Accounting, 9th Edition. Wiley, 02/2006. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use. Chapter 3 pg 128 P3.2 Using the information shown in P3.1, complete a commonsize vertical balance sheet analysis in proper form for Year 0007 and Year 0008. Comment on any changes you consider significant. P3.3 The following information has been extracted from a hotel's food department for the months of August and September. August September Departmental S. R. Divisions S. R. Guests S. R. Guests Room service $ 22,600 927 $ 18,000 756 Dining room 118,500 4,628 95,500 3,765 Bar-lounge 5,500 846 4,100 637 Coffee shop 53,400 9,709 48,700 8,604 Banquets 198,600 6,687 211,500 6,805 Totals $398,600 22,797 $377,800 20,567 Departmental Divisions August September Cost of sales $136,200 $127,800 Wages and salaries expense 107,900 101,500 Employee benefits expense 14,000 14,500 Linen expense 6,400 6,000 China expense 10,600 9,800 Supplies expense 9,800 9,400 Other expense 19,200 17,600 Total operating expenses $304,100 $286,600 Departmental Operating Income 94,500 $ 91,200 $ a. For each sales revenue division, calculate the average check per guest for August and September. b. Calculate the average cost per guest and total average cost for each month. c. Determine the departmental operating income per guest for each month. P3.4 A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B are as follows: (Jagels 128129) Jagels, Martin G. Hospitality Management Accounting, 9th Edition. Wiley, 02/2006. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use. Chapter 3 pg 128-129 P3.2 Using the information shown in P3.1, complete a commonsize vertical balance sheet analysis in proper form for Year 0007 and Year 0008. Comment on any changes you consider significant. P3.3 The following information has been extracted from a hotel's food department for the months of August and September. August September Departmental S. R. Divisions S. R. Guests S. R. Guests Room service $ 22,600 927 $ 18,000 756 Dining room 118,500 4,628 95,500 3,765 Bar-lounge 5,500 846 4,100 637 Coffee shop 53,400 9,709 48,700 8,604 Banquets 198,600 6,687 211,500 6,805 Totals $398,600 22,797 $377,800 20,567 Departmental Divisions August September Cost of sales $136,200 $127,800 Wages and salaries expense 107,900 101,500 Employee benefits expense 14,000 14,500 Linen expense 6,400 6,000 China expense 10,600 9,800 Supplies expense 9,800 9,400 Other expense 19,200 17,600 Total operating expenses $304,100 $286,600 Departmental Operating Income 94,500 $ 91,200 $ a. For each sales revenue division, calculate the average check per guest for August and September. b. Calculate the average cost per guest and total average cost for each month. c. Determine the departmental operating income per guest for each month. P3.4 A company owns two restaurants in the same town. Operating results for the first three months of the current year for restaurants A and B are as follows: Restaurant A Restaurant B Sales revenue $154,300 $206,100 Cost of sales 60,200 78,900 Gross margin 94,100 $ $127,200 Direct Expenses Wages expense $45,600 $70,400 Supplies expense 12,700 16,800 Other direct costs 4,500 62,800 6,100 93,300 Contributory Income $ 31,300 $ 33,900 Indirect Expenses Rent expense $ 6,500 $ 9,000 Insurance expense 2,000 3,000 Other indirect expenses 3,200 11,700 3,600 15,600 Operating Income 19,600 $ 18,300 $ The owners of the restaurants are concerned that restaurant B reports higher sales revenue, yet produces a lower operating income than restaurant A. Convert this information into a commonsize vertical income statement for each restaurant, and comment on the results. P3.5 The sales revenue, food cost of sales, and guests served for a small fastfood carryout division of a restaurant for the past six months are given as follows: Month Sales Revenue Cost of Sales, Food Guests Served 1 $258,200 $ 96,200 10,200 2 274,800 104,300 10,400 3 285,600 110,500 10,300 4 289,400 113,100 10,100 5 298,300 118,900 10,400 6 304,600 123,700 10,500 For each of the six months: a. Calculate average check and average costs of sales food. b. Using these averages, calculate a trend index number. Set the trend index for month 1 at 100% (or 100) and complete trend index numbers for the remaining five months. c. With the index numbers identified, convert sales revenue and cost of sales food from historic to current dollars. d. Comment on the results of your calculations of the three requirements for the six months. (Jagels 128130) Jagels, Martin G. Hospitality Management Accounting, 9th Edition. Wiley, 02/2006. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use. Chapter 3 pg 130 P3.6 A motel had the following annual sales revenue and average room rate figures for the last five years. During this fiveyear period there were no changes in the number or type of rooms available and the clientele remained basically the same. Year Annual Sales Revenue Average Room Rate 1 $1,401,429 $75.00 2 $1,429,367 $76.30 3 $1,480,552 $77.60 4 $1,520,700 $78.50 5 $1,553,091 $79.90 a. Prepare room rate trend numbers from the average room rates using 100% (or 100) as the base trend index number for Year 1. b. Use the room rate index numbers identified to convert the reported annual historic sales revenue to current dollars. c. After the conversion is completed, comment on the results of your analysis. P3.7 Two successive monthly income statements for the food department of a motor lodge are shown here. Present the income statements in a comparative horizontal analysis format and comment on any significant differences. Sales Revenue August September Room service $ 11,300 $ 9,000 Dining room 75,900 63,700 Bar-lounge 5,500 4,100 Coffee shop 53,400 48,700 Banquets 66,200 70,500 Total Sales Revenue $212,300 $196,000 Cost of sales 68,100) ( 63,900) ( Gross Margin $144,200 $132,100 Operating Expenses Wages and salaries $ 75,800 $ 71,100 Employee benefits 11,400 10,700 Linen and laundry 3,200 3,000 China, glassware, & tableware 5,300 4,900 Miscellaneous operating costs 4,900 4,700 Operating supplies 9,600 8,800 Total Operating Expenses 110,200) ( 103,200) ( Departmental Operating Income 34,000 $ 28,900 $ (Jagels 130131) Jagels, Martin G. Hospitality Management Accounting, 9th Edition. Wiley, 02/2006. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use. Chapter 3 pg 133 For each of the three items, calculate trend percentages. Using the results from this analysis, discuss whether the situation developing for the catering service is desirable. P3.13 Assume that appropriate general trend index numbers for the catering service sales revenue and its food costs were as follows for the six periods referred to in P3.12. Period Sales Revenue Index Cost Index 1 107 121 2 114 125 3 121 131 4 130 137 5 144 144 6 147 151 Convert the historic dollars of sales revenue and the historic dollars of cost of sales in P3.12 to current dollars and discuss the results. P3.14 A motel had the following annual sales revenue and average room rate figures for the last five years. During this fiveyear period, there were no changes in the number or type of rooms available, and the type of clientele remained the same. Year Annual Sales Revenue Average Room Rate 1 $2,205,952 $85.00 2 $2,254,695 $88.60 3 $2,299,526 $89.70 4 $2,334,484 $91.40 5 $2,380,856 $93.80 Prepare index numbers from the average room rates. Use the index numbers identified to convert the annual sales revenue to current dollars. After the conversion is completed, comment on the results of your analysis. CASE 3 (Jagels 133) Jagels, Martin G. Hospitality Management Accounting, 9th Edition. Wiley, 02/2006. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use. Chapter 3: Discussion Questions (Pg 124) 2. What is comparative horizontal balance sheet analysis? This type of analysis shows change in any particular category of finances over a period of time. The first step is to figure out the dollar change over a period of time and then to determine what percentage of change that represents. 5. What is the objective of common-size vertical income statements? In this method, every item is reported as a percentage of the revenue. The reason this is sometimes downe is that it is the best way to help the reader or analysts see how much of the revenue goes to any particular item. When then this is done over a period of time it is easier to see what changes result from which actions. 7. Why are trend results often more meaningful than a comparison limited to two successive accounting periods? Trend results help the analyst or stakeholder to look at the differenes that changes have made over a period of time, rather than limiting it to a year or two. Not only is this an easy process but it makes people much more aware of the results of their decisions (or the company's decisions). 8. How is a trend Index calculated? First, the dollar change over a period of time is calculated (amount of the item in the year being analyzed - amount of the item in the base year). Then, percentage of change is calculated, where the dollar change is divided by the amount of the item in the base year, and then multiplied by 100 to get the percentage of change. 9. In inflationary times, why is comparative horizontal analysis and a trend index misleading? Comparative horizontal analysis and a comparative horizontal analysis assumes that money is worth roughly the same amount. In inflationary times, the money is not "worth" the same amount from year to year. For example, this year a dollar may be worth a dollar but next year, only worth 87 cents and the year after, 52 cents. Without extensive calculations to compensate for this change, the results would be very misleading. 10. What is the equation for converting past historic period dollars to to current period dollars? Determine the real value ( R ) in constant dollars by taking the nominal value in current dollars (N) and dividing by the Consumer Price Index (PI), which can be retrieved from government websites. Then, multiply by 100 to get the percentage. Chapter 3: Exercises (Pg 125-126) E3.3: Complete a common-size (vertical) analysis of this condensed income statement: Sales Cost of sales Gross margin Operating expenses Operation income $482,000 202,440 279,560 207,400 72,160 100.0% 42.0% 58.0% 43.0% 15.0% Formula:=C5/$C5 E3.4: Compute an index trend using Year 1 as the base period: Average room rate Index Year 1 $50.00 Year 2 $48.00 Year 3 $54.00 Formula: E3.5: Determine the average check per guest: Dining Room Bar-Lounge Sales $150,080 $68,050 Guests 9,380 5,444 Average $16.00 $12.50 Formula: =C20/D20, =C21/D21 E3.8: Fill in the missing numbers and % on this comparative income statement: Sales Cost of Sales Gross margin Direct Costs Contributory Income Indirect Costs Operating Income Year 07 $23,502 9,208 Year 08 $ Change 1,110 9,438 10,202 1,420 3,552 2,477 $1,149 E3.9: Convert March, April, May to current (May) dollars: March April May Sales $48,000 $50,000 $52,000 Index Current $ 110 112 115 Formula: % Chapter 3: Problem 3.3 (Pg 128) a. Compute average check per division in August and September: August Sales Guests Average Sales Room Service $22,600 927 $24.38 $18,000 Dining Room $118,500 4,628 $25.61 $95,500 Bar-Lounge $5,500 846 $6.50 $4,100 Coffee Shop $53,400 9,709 $5.50 $48,700 Banquets $198,600 6,687 $29.70 $211,500 Totals $398,600 22,797 $17.48 $377,800 September Guests 756 3,765 637 8,604 6,805 20,567 Average $23.81 $25.37 $6.44 $5.66 $31.08 $18.37 b. Calculate average of each cost/expense element per guest in August and September: August September Element Dollars Guests Average Dollars Guests Cost of Sales $136,200 22,797 $5.97 $127,800 20,567 Wages 107,900 22,797 $4.73 101,500 20,567 Benefits 14,000 22,797 $0.61 14,500 20,567 Linen 6,400 22,797 $0.28 6,000 20,567 China 10,600 22,797 $0.46 9,800 20,567 Supplies 9,800 22,797 $0.43 9,400 20,567 Other 19,200 22,797 $0.84 17,600 20,567 Total 304,100 22,797 $13.34 286,600 20,567 Average $6.21 $4.94 $0.71 $0.29 $0.48 $0.46 $0.86 $13.93 c. Calculate the departmental income per guest in August and September: August September Revenue $398,600 $377,800 Expenses 304,100 286,600 Income 94,500 91,200 Income/Guest $34.97 $36.74 Formula:$ (C27+C28+C29)/D11 Can you explain the difference in performance between August and September? While the average amount spent was a lower in August, the cost of sales and wages was signficantly lower in September as well as marginally lower costs in most areas. This raised the net income per guest Chapter 3: Problem 3.4 (Pg 128-129) Calculate a common-size vertical income statement for each restaurant: Rest A % Rest B % Sales $154,300 $206,100 Cost of Sales 60,200 39.0% 78,900 38.3% Gross Margin 94,100 61.0% 127,200 61.7% Wage Expense 45,600 29.6% 70,400 34.2% Supplies Expenses 12,700 8.2% 16,800 8.2% Other Direct Costs 4,500 2.9% 6,100 3.0% Contrib. Income 31,300 20.3% 33,900 16.4% Rent Expense 6,500 4.2% 9,000 4.4% Insurance Expense 2,000 1.3% 3,000 1.5% Other Indirect Exp. 3,200 2.1% 3,600 1.7% Operating Income $19,600 12.7% $18,300 8.9% Formula:=(C6/C5) Comment on the performance of each restaurant. List the areas where each is operating in a superior manner to the other restaurant. Restaurant A des better at holding down wages and contrib. income; restaurant b does marginally better at controlling indirect expensives. Chapter 3: Problem 3.6 (Pg 130) P3.6 A motel had the following annual sales and average room rate for the past five years. During this period there were no changes in the number or type of rooms and the clientele remained basically the same. a. Compute Room Rate Index trend numbers using 100 as the base Room Rate Index for Year 1. b. Using the Room Rate Index developed, convert the reported historic dollar revenue into current dollars. Revenue Year 1 Year 2 Year 3 Year 4 Year 5 $1,401,429 $1,429,367 $1,480,552 $1,520,700 $1,553,091 Room Rate $75.00 $76.30 $77.60 $78.50 $79.90 Room Rate Index Current $ Room Rate Index Formula: Current Dollar Conversion Formula: c. Please comment on the sales pattern. Would you consider investing in this establishment? It is important to chose a benchmark when assessing the performance of the operation. What might that benchmark be? Chapter 3: Problem 3.14 (Pg 133) P3.14 A motel had the following annual sales and average room rate for the past five years. During this period there were no changes in the number or type of rooms and the clientele remained basically the same. a. Compute Room Rate Index trend numbers using 100 as the base Room Rate Index for Year 1. b. Using the given CPI data, convert the reported historic dollar revenue into current (2011) dollars. Revenue 2007 2008 2009 2010 2011 Room Rate $1,427,000 $1,540,000 $1,620,000 $1,320,000 $1,410,000 $85.00 $88.60 $89.70 $91.40 $93.80 Room Rate Index Formula: Current Dollar Conversion Formula: c. Please comment on the sales pattern. Room Rate Index CPI 207.34 215.30 214.54 218.06 224.94 Revenue in Current $