Week 9 EOC: Chapter 9 Apply What You've Learned (342-343)

“I think I can buy it at a great price,” said Dan Flood. He was talking about the Watershed Restaurant. The property was for sale and Dan was meeting with Loralei Glenn, his friend and an experienced restaurant manager. “It’s losing about 7 cents on each dollar sale now,” continued Dan, “but I know we can turn that around.” 

Loralei considered Dan’s proposal that they form a partnership, acquire the restaurant, and share in the profits they planned to make. She knew that, before it was possible to share profits, they would actually have to make a profit. That meant, to go from losing 7 cents per dollar to making money, they would have to increase sales, reduce costs, or both. She mentioned that to Dan. 

“Well,” he replied, “I’m not sure we need to increase the sales at all. If we buy at the right price, I think we just need to reduce our costs. You can do that!” 

Assume that the restaurant’s sales volume last year was approximately $1,400,000, and thus its loss for the year was about $98,000. 

1. If Dan and Loralei decide to buy the restaurant, some fixed costs would be incurred. List at least five important fixed costs that would be directly affected by the purchase decisions Dan would make regarding the acquisition of the property. 

A. If Dan and Loralei decide to buy the restaurant, there will be some fixed costs "A fixed cost is one that remains constant despite increases or decreases in sales volume (number of guests served or number of rooms sold)."(Dopson 317). There are five costs which I believe will be directly affected by their purchase, which will affecting whether or not they purchase the property. These fixed costs are as follows, music and entertainment, administrative and general, occupancy, depreciation, and interest.

2. If Dan and Loralei operate the restaurant, some variable costs would be incurred. List at least five important variable costs that would be directly affected by the operating decisions Loralei will make as she manages the restaurant. 

A. If Dan and Loralei operate the restaurant, there will be some variable costs "A variable cost is one that increases as sales volume increases and decreases as sales volume decreases."(Dopson 318). There are five costs which I believe will be directly affected by their decisions if they choice to purchases the restaurant. These variable costs are as follows, food cost, beverage cost, labor cost, consumables (i.e. napkins, etc.) and guest type.

3. Consider the decisions Dan and Loralei will make if they choose to acquire the restaurant. While clearly both are important, whose decisions do you think are the most important to ensuring the future profitability of the Watershed? Why do you think so?

A. Considering the decisions Dan and Loralei will need to make if they choose to acquire the restaurant, it is important to determine the menu pricing. "Perhaps no area of hospitality management is less well understood than the area of pricing food and beverage products"(Dopson 240). For these reasons I believe that they should follow Loralei's needs over Dan's when making the final decisions based on the fact the restaurant is currently losing money stating that the cost need to be based on sales more than just fixed costs.

Work Cited: 

Dopson, Lea R. Managerial Accounting for the Hospitality Industry. Wiley, 09/2008. VitalSource Bookshelf Online.

Week 8 EOC: Chapter 8, Question 4

a. What were the total revenues in October 2009 and October 2010?

b. What was the GOP in dollars in October 2009 and October 2010?

c. What was the percentage of GOP to total revenues in October 2009 and October 2010?

d. What was the flow-through percentage achieved by Santi’s hotel? What is your assessment of that percentage?

Answers: 

a.    The total revenues for both October 2009 and 2010 can be found in the top section of the income statement. "The income statement reports in detail and for a very specific time period, a business’s revenue from all its revenue-producing sources, the expenses required to generate those revenues, and the resulting profits or losses"(Dopson 32). The total revenue for October 2009 was $545,000 and where the total revenue for October 2010 was 583,000.

b.  The gross operating profit can be found in the second section of the income statement."Gross operating profit (GOP) is, in effect, total hotel revenue less those expenses that are considered directly controllable by management."(Dopson 296).The gross operating profit in dollars for October 2009 was $162,000 and the total for October 2010 was $184,550.

c. The percentage of the gross operating profits to total revenues can be found in the second section of the income statement. The percentage of the gross operating profits to the total revenues for October 2009 was 29.71% and where the percentage of gross operating profits to total revenues for October 2010 was 32%.

d.  The flow-through percentage can be found at the very end of the income statement. "Flow-through is a measure of the ability of a hotel to convert increased revenue dollars to increased gross operating profit dollars"(Dopson 296).The flow-through percentage achieved by Santi’s hotel was 59.34%. My assessment of this percentage is good, it shows the manger has done things very efficiently.

Work Cited: 

Dopson, Lea R. Managerial Accounting for the Hospitality Industry. Wiley, 09/2008. VitalSource Bookshelf Online.

Week 7 EOC: Trump and Small Business

While there are those that have already reacted to the news of Trump being elected, and the stock market has fluctuated. I think it is almost pointless to actually make a call on how this going to go with Trump in office. Most of the articles and opinions of this is all follow one of the main sentiments of the public, no one thought he was going to win. So once they get over that little hiccup in all their plans, I think we will get a better picture of what we will be dealing with. Though initially you have reports like "Under a President Donald Trump, markets expect higher volatility and higher prices for safe haven assets such as Treasuries, precious metals and the Japanese yen. How has Trump Getting Elected effected the Business Market"(pbs.org). 

Though watching the market bounce right back to normal, after the initial shock is the strongest indication of what is going to happen. "Well, that was quick. Wall Street's midnight anziety about Donald Trump's victory appears to have been for nothing. The market snapped back quickly Wednesday  morning, just hours after all the major indices tumbled badly overnight."(money.usnews.com). With all the coverage and grandizing what has been going on, I don't think anyone has really taken a moment to realize the world will keep turning. The fact of the matter is we have a president coming into office agian, that around half the country doesn't want. 

The protest have been growing and desolving as they do, and there are extremest on both side. But for me it will be ok because people know there is a shark in the water and they are watching it. The thing that I believe would upset the market more would be if the "Dump Trump" campaign actually achieved what they are trying to do. "But others are taking things a step further, signing an online petition and writing letters to members of the Electoral College, asking them not to vote the way their states did at the polls" (cnn.com). While I don't think it will happen, to see how the system would react to such an event. I would rather see him in office, and that's saying a lot.


http://www.pbs.org/newshour/making-sense/column-stock-market-doesnt-like-idea-trump-presidency/

http://money.usnews.com/investing/slideshows/8-ways-president-donald-trump-will-affect-wall-street

Week 6 EOC: Weed in the Work Place

As a personal opinion I believe that weed in the work place is actually a bad idea. While I whole heartedly believe that there are those who work better or can handle themselves in a professional manor. The fact of the matter is I have had to many experiences with people who don't know the boundaries of work place and getting to high.“Overall, however, there exists little evidence that cannabis use is associated with lower productivity and/or elevated health costs among full-time employees.” (NORML.org). Though this evidence counters my point, I think it speaks to the main reason I am against it, it is not the substance that I have an issue with rather the user.

That being said I think in certain industries it is acceptable and ultimately rest on the owners to decide what should be done. Though one of the biggest things to make that desicion beside industry specific oversight organizations will be insurance companies. The risk of having someone liable for the company under the influence will give any company pause, but I think the turn in the legal industry might see that curve a bit. "Options are increasing though Weiss said. “We’re seeing more of the big name players enter the market now that they’ve seen others dip their toe in successfully,” he said." (Forbes.com). I believe once these companies start having serious investments inside this industry, it will be the final tipping point for over all reform.

Whether this reform will justify allowing people to use weed in the work place only time will tell. With testing at the place it is today and the laws being so open, I don't believe there will be a definitive route for dealing with this issue. "Companies are trying to decide between two extremes: policies on positive test results to keep users out of their workforces, or loosening them to avoid driving away qualified employees."(theguardian.com).  I don't believe there is an easy answer, and I think any one should be warry of suporting either side to the extreme. That being said my generation hasn't put there foot down for too many things, but this seems to be one that we aren't giving up on.  

"NORML.org - Working to Reform Marijuana Laws." NORML's Model Workplace Policy for Cannabis -. N.p., n.d. Web. 07 Nov. 2016.
http://www.forbes.com/sites/julieweed/2015/07/05/insurance-companies-start-noticing-the-legal-cannabis-industry/#530cc87c5810
https://www.theguardian.com/sustainable-business/2015/apr/19/marijuana-workplace-drug-testing-employers-employees-medical-recreational