ACCT3104 Management Accounting
Semester 2, 2018
Case Study Team Assignment
Lone Star Lodging
(Weight: 20% of Final Grade)
This document has the following parts:
- Administration;
- Lone Star Lodging (i.e., the Case Study);
- Submission Requirements and Guidance;
- Marking Rubric; and
- Assessment Policy.
ADMINISTRATION
Overview:
The purpose of this case is to illustrate variance analysis in a service industry setting. You should aim to integrate learnings in ACCT3104 up to and including Topic 8. For example, teams’ ability to add insight and depth to their variance analyses requires application of knowledge beyond mere calculations, as reflected in the marking rubric.
You are given marketing data, a budgeted income statement, actual income statement, employee data and the underlying monthly budget prepared by the general manager. You use a monthly budget to assess the cost behaviour of each of the 50-plus line items, creating a series of variance analyses that enable you to assess the performance of the hotel. Data on employee wages and hours worked enable you to “drill down” to compute variances for hotel labour. Another unique aspect of the case is the availability of market data from a third-party, industry benchmarking firm that allows you to compute and further explore sales volume variances (i.e., sales variance analysis and market variance analyses).
It is envisaged that teams will undertake their own independent research of the hotel industry. For example, by consulting various sources such as journal articles and industry related publications etc. to develop their understanding of the contextual environment (i.e., hotels). This should further assist teams to provide depth and meaningful interpretation of results obtained from their analyses.
Working in your Team:
A key Learning Objective of the case study is for you to develop your ability to work as part of a team to recognise, analyse and propose solutions to organisational problems that relate to management accounting issues. It is expected that you work as a cohesive team, meaning that you are to discuss questions and work on tasks within your team.
According to UQ policy, students must not be able to gain an unfair advantage in assessment. This means that course staff will not provide any specific guidance to teams beyond what is written in this document and the course teachings. For example, we will not comment on questions such as whether a team’s case calculations or solutions are correct or give advice on the best approach to achieving the correct solution. Finding answers to such questions is, indeed, the very essence of your team’s task in this assessment. Please refer to the accompanying ‘Use of case studies to learn in ACCT3104’ document posted to Blackboard for additional guidance in completing your case study.
The Case Study appears on the following page.
LONE STAR LODGING
Sitting at his desk reviewing the results of the last year (i.e., the year 2017), Jack Smith reflected back on his second year as General Manager of the Lone Star Hotel. Next week is the Regional Operations Review in nearby Lubbock, where managers from surrounding areas will gather with Victoria Jennings, Regional VP of Operations. Jack will need to summarize the hotel’s performance and, recalling variance analysis, thought this tool would be a rigorous way to conduct his analysis.
Company Background
The Lone Star Hotel is a 126-room economy-lodging hotel in Amarillo, Texas. Built in 1980, it is part of Lone Star Lodging, a privately-owned hotel chain headquartered in suburban Houston, Texas. Lone Star operates a network of 207 hotels in four states: Texas, New Mexico, Oklahoma and Arkansas. About half of the hotels are owned and operated by the company.
Present Situation
Renovated two years ago, the hotel competes with sixteen other economy-lodging hotels in a market that is more competitive than most. However, when thinking about its market share, company management actually considers three nearby hotels to be its direct competitors. Sales data on regional and local competitors for the past five years are regularly obtained from an industry benchmarking firm. See Exhibit 1. In the hospitality industry, average sales price is average daily rate (ADR), defined as the total room revenue divided by the number of rooms rented. Another industry-standard metric, occupancy, represents capacity utilization. Occupancy is defined as the total number of rooms rented (i.e., output) divided by the number of rooms available during the period (i.e., capacity). In preparing his budget, Jack expected the 2017 market size to be 10% higher than the 2016 market size. For 2017, the benchmarking firm reported that local competitors rented 77,291 rooms at an ADR of $59.80.
Smith turned to the report detailing budgeted and actual revenue and expense data (Exhibit 2). The HR Department provided Jack with the hours worked by hotel staff. The maintenance worker and general manager are normally full-time workers (i.e., 40 hours per week, 50 weeks a year). All other workers are considered full-time, although many of them work less than 40 hours per week. See Exhibit 3. In preparing the budget, Jack planned on housekeeping staff using a standard time of 30 minutes/room with a wage rate of $7.00/hour. The head housekeeper’s wage was budgeted at $9.50/hour and usually works 40 hours; during slow periods, the head housekeeper may work fewer hours. Jack anticipated having one person staffing the front desk at all hours (i.e., 24/7). With the exception of the general manager, employees do not get paid vacation time. Further, with high turnover, most employees do not receive benefits (health care, retirement contributions, etc.)
Exhibit 4 shows the monthly budget Jack had developed to submit the required annual budget. A description of accounts is shown in Exhibit 5.
Exhibit 1 Local and Regional Competitor Sales Data
Local Competitors Metropolitan Area
Rooms ADR Occupancy Rooms ADR Occupancy
Year Rented ($) (%) Rentals ($) (%)
2012 96,099 60.77 58.72 181,361 47.53 56.11
2013 104,013 64.70 58.16 196,033 54.78 59.15
2014 100,651 65.86 55.86 215,797 59.04 62.80
2015 94,268 67.67 51.55 218,162 62.73 59.35
2016 79,391 62.40 43.41 192,519 55.73 51.81
Note. ADR is Average Daily Rate and is measured as total revenue divided by the number of rooms rented (i.e., sales price). Occupancy is measured as rooms rented divided by the total number of rooms available × 100 (i.e., capacity utilization).
Exhibit 2 2017 Profit-and-Loss Summary for the Amarillo Property
Panel A: Summary Statistics and Revenues
Budget Actual
Rooms Available 45,990 45,990
Rooms Rented 27,376 25,435
Occupancy 59.5% 55.3%
Average Daily Rate (ADR) $ 43.79 $ 44.65
Revenue per Available Room (RevPAR) $ 26.07 $ 24.69
REVENUES
Room Rentals $ 1,200,138 $ 1,136,619
Revenue Allowance (1,280) (1,060)
Total Room Revenue $ 1,198,858 $ 1,135,559
Internet Access $ 4,900 $ 5,534
Vouchers 5,000 1,262
Laundry 1,310 1,240
Vending 3,900 3,708
Total Other $ 15,110 $ 11,744
TOTAL REVENUE $ 1,213,968 $ 1,147,303
Exhibit 2 2017 Profit-and-Loss Summary for the Amarillo Property (continued)
Panel B: Expenses
Budget Actual
EXPENSES
General Manager $ 28,800 $ 27,434
Front Desk Staff 72,000 82,089
Total Front Office $ 100,800 $ 109,523
Head Housekeeper $ 19,000 $ 15,094
Housekeepers 81,816 89,688
Total Housekeeping $ 100,816 $ 104,782
Maintenance Wages $ 20,700 $ 23,577
Regional Maintenance Support 3,180 6,452
Incentive Pay (staff) 0 0
Bonus Expense, General Manager 2,520 1,346
Payroll Tax Expense 18,956 21,339
Total Other-Personnel Payroll $ 45,356 $ 52,714
Gross Payroll $ 246,972 $ 267,019
Vacation Expense $ 5,700 $ 3,494
Holiday Expense 1,620 1,690
Staff Incentives 640 639
Employee Relocation Expense 0 1,506
Employee Training 2,260 576
Workers Compensation 18,000 17,588
Health Insurance 28,800 20,005
Retirement Plan Contribution Expense 720 841
Group Life Insurance 672 613
Total Benefits Expense $ 58,412 $ 46,952
Total Personnel Costs $ 305,384 $ 313,971
Supplies, Cleaning Chemicals $ 6,083
Supplies, Linens 13,916
Supplies, Other 18,064
Total Supplies $ 26,007 $ 38,063
Memberships and Subscriptions $ 300 $ 0
Travel 3,360 4,141
Meals 840 921
Total Travel and Meals $ 4,500 $ 5,062
Exhibit 2 Profit-and-Loss Summary for the Amarillo Property (continued)
Panel B: Expenses (continued)
Budget Actual
Bad Debt Expense $ 0 $ 350
Cash Shortage and Excess 0 113
Bank Deposit Shortage and Excess 0 27
Credit Card Chargeback 0 619
Credit Card Fees 14,568 14,376
Guest Vouchers 1,200 540
Refunded Rentals 1,000 1,887
Total Guest Finance $ 16,768 $ 17,912
Other External Services $ 600 $ 722
Total Miscellaneous Operating Expenses $ 21,868 $ 23,696
Property Marketing $ 6,000 $ 4,807
Building $ 1,800 $ 1,913
Landscaping 9,900 10,524
Contracts 8,100 8,460
Laundry 6,000 2,713
Rooms (floors, doors, windows, etc.) 2,400 5,610
HVAC 4,800 3,219
Pool 1,600 2,447
Electrical and Fire 4,320 5,852
Plumbing 3,300 5,243
Supplies 3,600 4,160
Unclassified (including petty cash) 900 2,411
Total R&M $ 46,720 $ 52,552
Electricity $ 42,000 $ 36,144
Natural Gas 16,800 13,428
Water 33,000 21,919
Total Energy $ 91,800 $ 71,491
Garbage Collection $ 3,720 $ 3,494
Sewer 18,900 16,160
Salt (water softener) 2,100 1,740
Telephone 12,000 10,524
Satellite Television Subscription Fees 15,000 13,413
Utility Fees 900 802
Total Other Utilities $ 52,620 $ 46,133
TOTAL EXPENSES $ 550,399 $ 550,713
PROFIT $ 663,569 $ 596,590
Exhibit 3 Employee Information, by Job Type
Hours Hourly
Employee ID Worked Wage Rate
General Manager
44215 2,040.0 $13.45
Front Desk Employees
251256 2,077.1 $8.98
488442 (front desk supervisor) 2,087.5 $9.72
743796 1,610.1 $8.45
766468 1,520.0 $8.55
871219 1,425.1 $8.60
980511 517.1 $8.30
Head Housekeeper
134076 2,291.3 $9.70
Housekeepers
172931 1,462.2 $8.15
215403 1,627.8 $8.10
219100 1,249.2 $8.10
264365 1,117.2 $7.60
306002 1,188.0 $7.65
322777 1,151.5 $7.55
352605 423.6 $7.40
586120 43.7 $7.30
693453 245.7 $7.35
696487 155.5 $7.25
724731 73.4 $7.25
729577 511.1 $7.60
748933 111.6 $7.25
772040 121.4 $7.30
805364 282.4 $7.30
828589 125.4 $7.25
863038 63.6 $7.25
882112 21.9 $7.25
885651 235.4 $7.30
901105 124.2 $7.25
911934 320.0 $7.35
Maintenance Staff
288133 1,966.3 $11.99
166365 (regional support) 367.4 $17.56
Note. Due to rounding errors in the figures, the total cost is slightly different from the amounts shown on the 2017 income statement.
Exhibit 4 Jack’s Monthly Budget Worksheet
Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Rooms Available 3,906 3,528 3,906 3,780 3,906 3,780 3,906 3,906 3,780 3,906 3,780 3,906 45,990
Rooms Rented 2,247 2,100 2,210 2,484 2,195 2,390 2,297 2,730 2,303 1,890 2,239 2,291 27,376
Occupancy 57.5% 59.5% 56.6% 65.7% 56.2% 63.2% 58.8% 69.9% 60.9% 48.4% 59.2% 58.7% 59.5%
ADR $42.00 $40.00 $40.00 $44.00 $42.00 $48.00 $48.00 $50.00 $46.00 $44.00 $38.00 $42.00 $43.79
RevPAR $24.14 $23.79 $22.61 $28.89 $23.58 $30.31 $28.19 $34.91 $27.99 $21.26 $22.49 $24.62 $26.07
Revenues
Room Rentals $94,374 $84,000 $88,400 $109,296 $92,190 $114,720 $110,256 $136,500 $105,938 $83,160 $85,082 $96,222 $1,200,138
Revenue Allowance 80 80 80 100 100 140 160 160 130 100 80 70 1,280
Total Room Revenue $94,294 $83,920 $88,320 $109,196 $92,090 $114,580 $110,096 $136,340 $105,808 $83,060 $85,002 $96,152 $1,198,858
Internet Access $402 $376 $396 $445 $393 $428 $411 $489 $412 $338 $401 $410 $4,900
Vouchers 410 384 404 454 401 437 420 499 421 345 409 418 5,000
Laundry 50 50 50 80 80 200 200 200 200 100 50 50 1,310
Vending 150 150 150 240 300 600 600 600 500 300 160 150 3,900
Total Other 1,013 959 999 1,218 1,174 1,664 1,631 1,787 1,533 1,083 1,020 1,028 15,110
Total Revenue $95,307 $84,879 $89,319 $110,414 $93,264 $116,244 $111,727 $138,127 $107,341 $84,143 $86,022 $97,180 $1,213,968
Exhibit 4 Jack’s Monthly Budget Worksheet (continued)
Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Expenses
General Manager $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $28,800
Front Desk Staff 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 72,000
Total Front Office $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $8,400 $100,800
Head Housekeeper $1,583 $1,583 $1,584 $1,583 $1,583 $1,584 $1,583 $1,583 $1,584 $1,583 $1,583 $1,584 $19,000
Housekeepers 6,698 6,183 6,568 7,527 6,516 7,198 6,873 8,388 6,894 5,448 6,670 6,853 81,816
Total Housekeeping $7,865 $7,350 $7,735 $8,694 $7,683 $8,365 $8,040 $9,555 $8,061 $6,615 $7,837 $8,019 $95,816
Maintenance Wages $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $1,725 $20,700
Regional Maintenance 265 265 265 265 265 265 265 265 265 265 265 265 3,180
Incentive Pay (staff) 0 0 0 0 0 0 0 0 0 0 0 0 0
Bonus Expense, GM 210 210 210 210 210 210 210 210 210 210 210 210 2,520
Payroll Taxes 1,569 1,526 1,558 1,640 1,554 1,612 1,584 1,713 1,586 1,463 1,567 1,583 18,956
Total Other Personnel $3,769 $3,726 $3,758 $3,840 $3,754 $3,812 $3,784 $3,913 $3,786 $3,663 $3,767 $3,783 $45,356
Gross Payroll $20,034 $19,476 $19,893 $20,934 $19,837 $20,577 $20,224 $21,868 $20,247 $18,678 $20,004 $20,201 $241,972
Vacation Expense $475 $475 $475 $475 $475 $475 $475 $475 $475 $475 $475 $475 $5,700
Holiday Expense 135 135 135 135 135 135 135 135 135 135 135 135 1,620
Staff Incentives 35 35 35 35 90 90 90 90 35 35 35 35 640
Employee Relocation 0 0 0 0 0 0 0 0 0 0 0 0 0
Employee Training 720 140 140 140 140 140 140 140 140 140 140 140 2,260
Workers Compensation 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000
Health Insurance 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 2,400 28,800
Retirement Plan Contr. 60 60 60 60 60 60 60 60 60 60 60 60 720
Group Life Insurance 56 56 56 56 56 56 56 56 56 56 56 56 672
Total Benefits Expense $5,381 $4,801 $4,801 $4,801 $4,856 $4,856 $4,856 $4,856 $4,801 $4,801 $4,801 $4,801 $58,412
Total Personnel Costs $25,415 $24,277 $24,694 $25,735 $24,693 $25,433 $25,080 $26,724 $25,048 $23,479 $24,805 $25,002 $300,384
Total Supplies $2,135 $1,995 $2,100 $2,360 $2,085 $2,271 $2,182 $2,594 $2,188 $1,796 $2,127 $2,176 $26,007
Membership & Subs. $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $300 $300
Travel 280 280 280 280 280 280 280 280 280 280 280 280 3,360
Meals 70 70 70 70 70 70 70 70 70 70 70 70 840
Total Travel & Meals $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $650 $4,500
Exhibit 4 Jack’s Monthly Budget Worksheet (continued)
Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Expenses (continued)
Bad Debt Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cash Shortage/Excess 0 0 0 0 0 0 0 0 0 0 0 0 0
Bank Deposit Short/Exc. 0 0 0 0 0 0 0 0 0 0 0 0 0
Credit Card Chargeback 0 0 0 0 0 0 0 0 0 0 0 0 0
Credit Cards (40% cc) 1,144 1,019 1,072 1,325 1,119 1,395 1,341 1,658 1,288 1,010 1,032 1,166 14,568
Guest Vouchers 98 92 97 109 96 105 101 120 101 83 98 100 1,200
Refunded Rentals 82 77 81 91 80 87 84 100 84 69 82 84 1,000
Total Guest Finance $1,324 $1,187 $1,249 $1,525 $1,296 $1,587 $1,525 $1,877 $1,473 $1,162 $1,212 $1,350 $16,768
Other External Services 50 50 50 50 50 50 50 50 50 50 50 50 600
Total Misc. Operating $1,724 $1,587 $1,649 $1,925 $1,696 $1,987 $1,925 $2,277 $1,873 $1,562 $1,612 $2,050 $21,868
Property Marketing $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000
Building $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800
Landscaping 825 825 825 825 825 825 825 825 825 825 825 825 9,900
Contracts 675 675 675 675 675 675 675 675 675 675 675 675 8,100
Laundry 500 500 500 500 500 500 500 500 500 500 500 500 6,000
Rooms 200 200 200 200 200 200 200 200 200 200 200 200 2,400
HVAC 400 400 400 400 400 400 400 400 400 400 400 400 4,800
Pool 0 0 0 0 300 0 600 600 100 0 0 0 1,600
Electrical & Fire 360 360 360 360 360 360 360 360 360 360 360 360 4,320
Plumbing 275 275 275 275 275 275 275 275 275 275 275 275 3,300
Supplies 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Unclassified (petty cash) 75 75 75 75 75 75 75 75 75 75 75 75 900
Total R&M $3,760 $3,760 $3,760 $3,760 $4,060 $3,760 $4,360 $4,360 $3,860 $3,760 $3,760 $3,760 $46,720
Electricity $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $3,500 $42,000
Natural Gas 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800
Water 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 2,750 33,000
Total Energy $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $7,650 $91,800
Exhibit 4 Jack’s Monthly Budget Worksheet (continued)
Item Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Expenses (continued)
Garbage Collection $310 $310 $310 $310 $310 $310 $310 $310 $310 $310 $310 $310 $3,720
Sewer 1,575 1,575 1,575 1,575 1,575 1,575 1,575 1,575 1,575 1,575 1,575 1,575 18,900
Salt (water softener) 0 350 0 350 0 350 0 350 0 350 0 350 2,100
Telephone 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Satellite TV Subscr. 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 15,000
Utility Fees 75 75 75 75 75 75 75 75 75 75 75 75 900
Total Other Utilities $4,210 $4,560 $4,210 $4,560 $4,210 $4,560 $4,210 $4,560 $4,210 $4,560 $4,210 $4,560 $52,620
TOTAL EXPENSES $45,394 $44,329 $44,563 $46,489 $44,893 $46,161 $45,907 $48,665 $45,329 $43,306 $44,664 $45,699 $545,399
PROFIT $49,913 $40,550 $44,756 $63,925 $48,370 $70,084 $65,819 $89,463 $62,012 $40,837 $41,358 $51,482 $668,569
Exhibit 5 Account Descriptions
Revenue Accounts
Room Rentals. Revenue derived from room rentals. It is the average daily rate times rentals.
Revenue Allowance. Revenue allowances are refunds offered at the property at time of departure.
Internet Access. Revenue derived from the sale of daily guest Wi-Fi/Internet access.
Vouchers. Revenue from guests paying for their stay with guest vouchers.
Laundry. Revenue from customer use of coin-operated laundry equipment (washer and dryer).
Vending. Revenue received from customer purchases at on-site vending machines.
Expense Accounts
General Manager. Wages paid to the general manager. Managers receive free, on-site housing and utilities (electric, telephone, cable TV, etc.)
Front Desk Staff. Wages paid to employees working the front desk for customer check-in.
Total Housekeeping. Wages paid to employees that clean the room and clean laundry.
Maintenance Wages. Wages paid to an on-site maintenance worker.
Regional Maintenance Support. Wages for the regional maintenance person when on-site.
Incentive Pay (staff). Amounts paid to motivate employees. This is usually zero.
Bonus Expense, General Manager. Bonus expense paid to the general manager when specific performance targets are met. Bonus amounts are fixed for each goal and 90% of GMs receive their full bonus (i.e., bonuses are highly achievable).
Payroll Tax Expense. Amounts paid for payroll taxes. It is 8.5% of amounts paid to employees.
Vacation Expense. Amounts accrued to pay for the general manager’s vacation.
Holiday Expense. Amounts accrued to pay for the general manager’s paid holidays.
Staff Incentives. Amounts paid for anything that incentives hotel staff. For example, many general managers provide “pizza parties” on employee birthdays, or lunch on busy days.
Employee Relocation Expense. Amounts paid to reimburse employees who relocate to a new property. This amount is normally zero and the company normally only pays to relocate a general manager (a rare event).
Employee Training. Amounts paid for employee training. Training is provided for general managers and managers-in-training.
Workers Compensation. The amounts charged to workers’ compensation are based on expected insurance claim plus any expenses that develop over time. Amounts are actuarial estimates and, while budgeted by the general manager, the manager does not determine the amounts.
Health Insurance. Amounts paid for employee group health insurance. Since benefits are provided after 6 months of service, most staff do not participate in the insurance plan. (This is because employee turnover in low-skill, hospitality jobs is about very high; at the Amarillo property, turnover for housekeeping staff was 211% in the prior year.)
Retirement Plan Contribution Expense. Amounts paid by the company for employee retirement contributions. As with health insurance, few employees are with the firm long enough to participate in the plan and contributions are often solely for the general manager (where job tenure averages about 2.8 years).
Group Life Insurance. Expenses related to the provision of group life insurance. As with the prior two benefits plans, group life insurance is typically only being provided to the general manager.
Supplies. Expenses for all supplies. In prior years, supplies were listed in one category but, after the 2017 budget was prepared, the company developed several sub-accounts for supplies. Supplies at most hotels include guest amenities (e.g., soap, shampoo and hand cream), cleaning chemicals (e.g., carpet and floor cleaners and surface cleaners), postage, uniforms, freight, coffee and linens.
Memberships and Subscriptions. Amounts paid for memberships (e.g., the local chamber of commerce)
Travel. Amounts paid to reimburse employees who travel for company business. Most of the time the only reimbursement is for personal use of the car to make the daily cash deposit at the bank (i.e., mileage times the IRS-approved mileage reimbursement rate). Off-site travel is rare as regional managers visit properties for performance reviews and support.
Meals. Reimbursement for meal expenses. Expenses are typically incurred when a general manager is out of town for a meeting (e.g., the national or a regional meeting) or doing part-time duty as a relief general manager (from time to time a manager may be terminated and it may take some weeks or months to find a replacement). Meal expenses are relatively rare.
Bad Debt Expense. Amounts recorded to this account reflect credit transactions that have been “written off.” Since most transactions are handled in cash or with a credit card, bad debt expense is uncommon.
Cash Shortage and Excess. These amounts arise when the actual cash on hand differs from the amount that should be on hand, according to the property’s financial records. Since there are multiple employees handling cash, the amounts are not easily traced to a specific person. Discrepancies can occur from providing the incorrect change for a cash transaction, receiving an an amount less than billed, etc.
Bank Deposit Shortage and Excess. These amounts arise when the bank deposit does not match the amount that was supposed to have been deposited. When a discrepancy occurs, the bank’s amount is taken as the correct amount because of counting machines and good video surveillance at banks. If the general manager makes random, counting mistakes, these discrepancies should be small and should average out to zero. A persistent shortage is a strong signal that cash is being misappropriated. The general manager is the only person to make the daily bank deposit, so any shortage or excess is the responsibility of one person.
Credit Card Chargeback. Amounts refunded to credit card companies. These occur because of fraudulent credit card use and customer complaints (i.e., the firm granting a refund several days after the visit).
Credit Card Fees. Amounts paid to credit card companies for processing credit cards. Typically, this averages about 3% of the transaction cost. At most properties, more than 70% of transactions are settled in cash.
Guest Vouchers. Guests who received a voucher for compensation are able to use that voucher for a free night’s stay at any branded hotel in the network. The hotel who hosts a guest with a voucher records the revenue and the property that issued the guest voucher is charged for the guest visit and its expense is recorded to this account.
Refunded Rentals. These amounts are for customer refunds that occur off-property, often weeks after a guest visit. Almost always, these refunds are handled by the customer service staff at the corporate headquarters. Functionally, it is no different in financial impact than a revenue allowance.
Other External Services. Amounts paid to any third-party providers that are not related to maintenance. Security services is the most common expense related to this account.
Property Marketing. Amounts spent by the general manager for local advertising and marketing. Marketing activities include newspaper advertising, coupon booklets, billboards, direct mail, sponsoring a community athletic club, etc.
Building. Repairs and maintenance expenses related to the building.
Landscaping. Amounts paid for lawn care, new shrubbery, tree trimming, etc.
Contracts. Amounts paid to third parties that provide services to the hotel. This would include, for example, service contracts for the laundry equipment and pest control (termites, bed bugs, rodents, cockroaches, ants, etc.).
Laundry. Repairs and maintenance expenses related to the laundry equipment (washer, dryer, folder, etc.).
Rooms (floors, doors, windows, etc.). All expenses related to the repair and maintenance of the guest rooms (carpets, walls, windows, light fixtures, etc., except those items accounted for elsewhere (e.g., plumbing and climate control equipment).
HVAC. Repair and maintenance expenses related to heating, ventilation and air conditioning units. In most properties, including the case property, HVAC is handled by in-wall, all-in-one units.
Pool. All amounts paid for maintaining the swimming pool. This would include paint, chemicals, pump repairs, diving board repairs, upkeep of the surface and fences surrounding the pool, etc.
Electrical and Fire. All costs related to the repair and maintenance of electrical and fire safety equipment.
Plumbing. All expenses related to repairs and maintenance of plumbing and related fixtures (e.g., showers, bathtubs, sinks, toilets and the hot water heater).
Supplies. Amounts paid for supplies related to repairs and maintenance (e.g., duct tape, silicone, nuts, bolts and small tools).
Unclassified (including petty cash). This category is for all expenses related to repairs and maintenance that are not classified in any of the other accounts for repairs and maintenance.
Electricity. Amounts paid for electricity. Electricity is used in guest rooms (outlets, lighting, heating and air condition, etc.), in the lobby, for exterior lighting (parking lot, corridors), and in the laundry room.
Natural Gas. Amounts paid for natural gas. Natural gas is used for the boiler (water) and dryer (laundry). Rooms are heated using electricity.
Water. Amounts paid for water. Water is used in guest rooms, for the washing machine, to fill the pool and water the lawn.
Garbage Collection. Garbage is picked up twice a week by a licensed waste hauler using their waste containers located at a corner of the property. Garbage is usually limited to a handful of providers, some of which are national firms.
Sewer. Amounts paid to the city for hook-up to the city sewer system.
Salt (water softener). Amounts paid for salt used in a water softener.
Telephone. All costs related to telephone equipment (e.g., depreciation, repairs) and monthly telecommunications fees.
Satellite Television Subscription Fees. Expenses for subscription of television programming delivered by a satellite provider (e.g., DishTV or DirecTV).
Utility Fees. Amounts paid to utilities firms for connection and service fees.
SUBMISSION REQUIREMENTS AND GUIDANCE
Each student needs to complete in their team the Lone Star Lodging case study and submit by the due date and time following the submission requirements outlined below.
- The structure and contents of your report must follow the Marking Rubric Criteria. That is, use the section headings: 1. Analyses and Discussion; 1.1. Quantitative analyses and discussion; 1.2. Qualitative analyses and discussion; 1.3. Conclusions; and 2. Recommendations.
- An Excel file has been included in the case materials (on Blackboard), which contains data of Exhibits 1 to 4 of the case. It is anticipated that this will be helpful for your calculations.
- Ensure that you read guidance about completing case study assessment in the accompanying (on Blackboard) ‘Use of case studies to learn in ACCT3104.pdf’.
- You are required to submit a REPORT limited to five (5) typed pages (12pt Times New Roman font with 1.5 line spacing, normal MSWord margins). No footnotes/endnotes allowed in the report. Reference list is NOT included in the report page limit (APA 6th Referencing to be used). Any answers beyond the page limit will NOT be marked.
- You are permitted to attach additional page(s) you deem necessary as appendices to provide tables and/or calculations, graphs or other diagrams as appropriate to the case. These additional pages do NOT count toward the five page limit and they do NOT need to follow the font, line-spacing or margin requirements of your report (i.e. they are at your discretion but presentation is paramount). Of primary importance; these additional pages and ARE NOT for continuing your discussion of the case and ARE NOT marked as stand-alone. This means that you must explicitly discuss any relevant information pertaining to appendices in your report.
- Your assignment must reflect your own understanding of the case. Copied or plagiarised work will not be tolerated (students should refer to the University policy on plagiarism).
- The Case Study Assignment is to be submitted through Blackboard following the ‘Assessment’ link.
- Only one member of each group must submit the case selecting his/her name from the list of “authors” by 23:59 Sunday 7th of October 2018. Your “submission title” and your file name must be “ACCT3104 Team (number)” (e.g. ACCT3104 Team 14). Each team member’s name and student number MUST appear on the top right corner of the first page header. You should submit a pdf of your case study. (You should use size 8pt Times New Roman font for this header).
- No hard copy submission is required.
- Where a submission has not adhered to the page limits, font size, spacing, and/or margin guidelines or any other stipulations, there will be an adjustment to the team’s mark at the course coordinator’s discretion.
Marking Rubric: Lone Star Lodging (Sem 2, 2018 Case Study for ACCT3104)
| Case Study – Lone Star Lodging * | Not Attempted (0%) | Below Expectation (1-49%) | Satisfactory (50-69%) | Very Good (70-84%) | Outstanding (85%-100%) |
| 1. Analyses and Discussion; and Conclusions | |||||
| 1.1. Quantitative analyses and discussion:
(5 Marks) At a minimum, the following are required: Level 1 – Static Budget Variance Analysis; Level 2 – Flexible Budget Variance Analysis and Sales Volume Variance Analysis; Level 3 – Sales Variance Analysis; and Level 4 – Market Variance Analyses.
Calculations are required to reveal problems and issues and to enable comparisons to be made and fuel discussion.
|
No relevant calculations, tables, diagrams etc that relate to the quantitative analyses of this business have been provided. | Few relevant/correct calculations, tables, diagrams etc that relate to the quantitative analyses of this business have been made, and little if any discussion is provided. | Some relevant/correct calculations, tables, diagrams etc that relate to the quantitative analyses of this business have been provided and are discussed with some relevant comparisons/linkages made (if appropriate). | Most of the relevant/correct calculations, tables, diagrams etc that relate to the quantitative analyses of this business have been provided and are reasonably well discussed with relevant comparisons/linkages made (if appropriate). | Comprehensive calculations, tables, diagrams etc that relate to the quantitative analyses of this business have been provided and are clearly discussed with relevant comparisons/linkages made (if appropriate), and all quantitative analyses are correct. |
| 1.2. Qualitative analyses and discussion:
(5 Marks) Cohesive and well-developed theoretical (Qualitative) analysis and discussion that builds upon and adds depth/additional insights/linkages to/between any problems/issues identified in the ‘Quantitative analyses and discussion’. The team must explain ‘why’ rather than make statements that lack support/explanation. This Qualitative Analyses and Discussion should be supported by theory/concepts covered in ACCT3104. |
The team has made no attempt to provide qualitative analyses and discussion of the problems and issues. | The team has prepared inadequate qualitative analyses and discussion of the problems and issues. No relevant ACCT3104 concepts and theory have been discussed. | The team has prepared sound qualitative analyses and discussion of the problems and issues. Some of the relevant ACCT3104 concepts and theory have been discussed. | The team has prepared good and reasonably well developed qualitative analyses and discussion of the problems and issues. Most of the relevant ACCT3104 concepts and theory have been discussed. | The team has prepared comprehensive and well developed qualitative analyses and discussion of the problems and issues. All relevant ACCT3104 concepts and theory have been discussed. |
| 1.3. Conclusions (2.5 Marks) Taken together what do your quantitative and qualitative analyses reveal? Note: do not repeat the case facts, and do not repeat parts that you have already discussed in the quantitative and qualitative analyses and discussion sections etc. We want new insights (i.e., conclusions) based on the joint analyses (i.e. both quantitative and qualitative together). |
No conclusions have been provided. | The team has only drawn a few conclusions from the analyses and these are not well supported. | The team has only drawn some conclusions from the analyses and these are reasonably supported. | The team has drawn reasonable conclusions from the analyses and these are reasonably supported.
|
The team has drawn comprehensive conclusions from the analyses and these are well supported.
|
| 2. Recommendations (2.5 Marks) These need to be actions that management can take and that follow from the analyses. Ensure this has not been presented as a conclusion. The recommendations must reflect the discussion and analyses of the case (i.e., they are supported throughout your case study and are not just ‘new’ ideas). |
The team has not developed any practical recommendations. | The team has developed few practical recommendations to address the problems and issues of the business. | The team has developed some practical recommendations to address the problems and issues of the business but these are not complete. | The team has developed most of the practical recommendations to address the problems and issues of the business. | The team has developed clear, practical and comprehensive recommendations to address the problems and issues of the business. |
| 3. Research (2.5 Marks) Reference to a minimum of two sources (e.g., journal articles) relating to the topic have been provided in the analyses and/or the conclusions/recommendations sections of your case.
|
No relevant additional research has been provided | Additional research evidence has been provided but it is not relevant (significant) to the case. | Relevant additional research evidence has been provided but it is not well integrated into the report. | Relevant additional research evidence has been provided and has been adequately integrated into the report. | Relevant additional research evidence has been provided and has been well integrated into the report. |
| 4. Presentation, readability and referencing (2.5 Marks)
The team has proof-read their submission, presented it as a well-structured and cohesive report, and it is appropriately referenced using the APA 6th formatting. |
Your report presentation, readability and referencing is extremely poor. | Your report presentation, readability and referencing is below average. | Your report presentation, readability and referencing is satisfactory. | Your report presentation, readability and referencing is above average. | Your report presentation, readability and referencing is well above average. |
*Where a submission has not adhered to the page limits, font size, spacing, and/or margin guidelines or any other stipulations, there will be an adjustment to the team’s mark at the course coordinator’s discretion.
ASSESSMENT POLICY
Grading:
Students are provided with a grading rubric.
Academic Integrity
It is the University’s task to encourage ethical scholarship and to inform students and staff about the institutional standards of academic behaviour expected of them in learning, teaching and research. Students have a responsibility to maintain the highest standards of academic integrity in their work. Students must not cheat in examinations or other forms of assessment and must ensure they do not plagiarise.
Plagiarism
The University has adopted the following definition of plagiarism:
Plagiarism is the act of misrepresenting as one’s own original work the ideas, interpretations, words or creative works of another. These include published and unpublished documents, designs, music, sounds, images, photographs, computer codes and ideas gained through working in a group. These ideas, interpretations, words or works may be found in print and/or electronic media.
Students are encouraged to read the UQ Academic Integrity and Plagiarism policy (http://www.uq.edu.au/hupp/index.html?page=25128) which makes a comprehensive statement about the University’s approach to plagiarism, including the approved use of plagiarism detection software, the consequences of plagiarism and the principles associated with preventing plagiarism.
– If students cannot meet the due date for the case study submission, the following university policies and guidelines apply:
Applications for Extensions
- Medical grounds: Applications for extension on medical grounds shall be made by lodging the Application for Extension of Progressive Assessment form and supporting documentation at the location outlined in Section 5.3 of the Electronic Course Profile for the course concerned.
- Exceptional circumstances: Applications for extension on the grounds of exceptional circumstances shall be made to the relevant Course Coordinator/Program Director by lodging the Application for Extension of Progressive Assessment form and a personal statement outlining the grounds for the application at the location and by the due date outlined in Section 5.3 of the Electronic Course Profile for the course in which this application is made. If the exceptional circumstances are such that the student cannot reasonably be expected to have complied with these conditions, a case should be made as to why these conditions could not be met.
- Outcome of application: Students will be advised of the outcome of their application via their student email.
Note: A Case Study submitted after the due date and time (for which no extension has been granted prior to the due date), will incur a late submission penalty. The penalty is at the rate of 5% of the total available marks for the assessment item, for each calendar day or part thereof that it remains overdue. Once a case has been marked and discussed, there can be no late submissions. Assessment submitted more than 10 days after the due date will receive zero marks.
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