HTM440NHA: Zero-Based Budgeting (ZBB) System - ACME Enterprises - Accounting and Finance Assignment Help

Assignment Task:

For all questions, show your work for maximum marks.                        

Briefly explain the benefits to be derived by a company if they switch from an incremental budgeting system to a zero-based budgeting (ZBB) system. Your answer must be in your own words and must not exceed 100 words, which will require that you be succinct with your response.                         

ACME Enterprises is a successful new company which has turned a strong profit during its first year of operation. The company realistically predicts ongoing profitability for the foreseeable future. Given this bright forecast, should ACME’s management team engage in cash flow budgeting? Briefly explain in 120 words or less, which will require that you be succinct with your response.                     

A restaurant has an average cheque of $14.90, with an average variable cost of $9.81. Fixed costs are $381,000 for that year, and the owner wants to realize a profit of $77,181. 

Calculate the contribution margin per cheque? __________        

Calculate the contribution margin as a percentage? __________    

Calculate is the variable cost percentage? __________            

How many cheques are required to achieve the targeted profit level? __________
(2 marks)

What sales revenue is required to achieve the targeted profit level? __________
(2 marks)

The daily fixed cost of the banquet department of a hotel is $681.
A customer selected a menu for 100 persons that would have a food cost of $10.25 per person, a variable wage cost of $4.50 per person, and other variable costs of $2.81 per person. 

Calculate the total cost per person if this banquet was booked.    

What should the hotel’s banquet department charge the customer in terms of price per person if it wants to achieve a 20% operating income on sales revenue? What is the total sales revenue generated if this is achieved?    

The customer does not want to pay more than a maximum of $20.00 per person for this function. She is a good customer; she has booked many functions in the banquet room in the past and is expected to do so in the future. The function is two days from now, and the banquet department will not be able to book the room for any other function. (Note: Assume that the hotel has only one banquet room.)

Assuming the customer pays the maximum price per person stated above, what would be the profit or loss to the banquet department for staging this function?                        

Explain fully why you would, or would not, accept the customer’s maximum price per-person that she is prepared to pay.    

A company owns three motels in a beach resort area. While there is some business during the winter months, the company finds it difficult to staff the three motels during that time and has decided to close one of the three motels. 

The sales revenue and costs during this period are as shown below. Given that one of the motels must be closed and that its closing will have no effect on the sales revenue of the other two, which motel should be closed and why? 

Show all calculations in full detail that lead to your answer for full marks.     
Sales Revenue for Motel A - $297,181

Sales Revenue for Motel C - $277,181

Variable Costs for Motel B - $197,181

A motel has 100 rooms available to rent each night. The hotel rents out its rooms in the following proportions:

60% of the rooms are rented out as singles at $81 per night
40% of the rooms are rented out as doubles at $101 per night

Fixed costs are $1,377,181 per year. Variable costs are $18.00 per room, regardless if it’s a single room or a double room.

Calculate the average room rate for this hotel.            

Calculate the number of rooms the motel needs to sell each year in order to achieve an annual operating income of $250,000.                

Calculate occupancy rate required to achieve the annual operating income specified above in part b).                                

A restaurant owner, Khushbu, has targeted an after-tax net income of 25% on her $577,181 investment. Her income tax rate is 21%.

Calculate Khushbu’s net income after tax.                

Calculate Khushbu’s net income before tax.            
How much income tax would Khushbu be paying annually if she attains her targeted return?     

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