Accounting for Decision-Making Report: Hotel, Ethics, and Breakeven

This report, titled "Accounting for Decision-Making," presents a comprehensive analysis of financial concepts and their application in real-world scenarios. Part A focuses on calculating budgeted room revenue for the Dorquay Hotel over three months, examining occupancy rates and room rates. Part B delves into ethical considerations, specifically whether a Mr. Smith should accept a family trip sponsorship and the significance of an employee code of conduct for Practical Solution Ltd. Part C performs a breakeven analysis for a company, calculating the breakeven point, margin of safety, and profit achieved at different sales volumes. Furthermore, the report calculates the units needed to achieve the same profit in a subsequent year, considering changes in costs. The report concludes with references to relevant literature supporting the analysis. The report showcases the practical application of accounting principles in decision-making processes.

Running head: ACCOUNTING FOR DECISION-MAKING
Accounting for Decision-Making
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTING FOR DECISION-MAKING
Table of Contents
Part a:...............................................................................................................................................2
1. Calculating the budgeted room revenue for each three months:.................................................2
2. Discussing how the management of Dorquay Hotel could have estimated the occupancy rate:.2
Part b:...............................................................................................................................................3
1. Depicting whether Mr Smith should take the trip and outline any ethical concerns involved:...3
2. Depicting the significance and limitations of Practical Solution Ltd of having employee code
of conduct and stating the measures that needs to be included in such code of conduct:...............3
Part c:...............................................................................................................................................4
a. Calculate the breakeven analysis:................................................................................................4
2. Calculating margin of safety:.......................................................................................................5
3. Calculating profit achieved from annual volume of 32,000 units:..............................................5
4. Calculating the units that would need to be sold in 2016 to achieve same profits as 2015:........5
5: Providing relevant changes proposed in d:..................................................................................6
References and Bibliographies:.......................................................................................................6

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Part a:
1. Calculating the budgeted room revenue for each three months:
Particulars December January February
Occupancy rate of rooms 90% 95% 85%
Room rate (Average) $ 180 $ 198 $ 198
No. of rooms 20 20 20
Revenue of room (Budget) $ 3,240 $ 3,762 $ 3,366
2. Discussing how the management of Dorquay Hotel could have estimated the occupancy
rate:
From the evaluation it could be identified that Dorquay Hotel estimates a period of high
demand with no demands in subsequent months. Moreover, the company directly allows longer
duration stay while neglecting the short duration stage that is needed by customers. This
eventually allowed the organisation to maintain the relevant occupancy rate in slow season. The
relevant decline and occupancy rate would be seen from December to January, which was more
or less 10%. Decline in occupancy rate directly indicates the overall increment in room charges
that has been implemented by the organisation in November (Francis et al., 2015). The
occupancy rate has mainly declined due to increment in room rent, which is directly reducing
demand from potential customers.

3ACCOUNTING FOR DECISION-MAKING
Part b:
1. Depicting whether Mr Smith should take the trip and outline any ethical concerns
involved:
From the evaluation of overall case study it it advisable that Mr Smith should n ot take
the trip to Los Angeles with his family, as it issss unethical activity. The family trip sponsorship
that will be conducted by AnitahLoh is mainly unethical, as she is the sales representative of
Dogto Ltd who is trying to sell their software. Moreover, taking the family trip would eventually
result in dishonest behaviour in part of Mr Smith, which could increase unethical behaviour in
workplace. The inheritance risk is mainly identified as the overall ethical concern involved in the
case. This gift is mainly provided as a gift to Mr Smith who would chose the software packages
of the company and makes unethical decision (Collier, 2015).
2. Depicting the significance and limitations of Practical Solution Ltd of having employee
code of conduct and stating the measures that needs to be included in such code of conduct:
Creation of employee code of conduct is one of the significant endeavours that need to be
conducted by organisation. This employee code could eventually help in outlining the overall
acceptable behaviour that needs to be conducted by employees of the organisation. The main
significance of using the code of conduct for employees is that it increases professionalism in the
organisation, while the major drawback is the limitations of the employee code of conduct, as it
would not address all the situations (Francis et al., 2015).
With the help of employee code of conduct the overall organisation are mainly able to
bear relevant community that directly affect activities of the company. The overall employee

4ACCOUNTING FOR DECISION-MAKING
code mainly helps in developing the business conduct policy, which directly affect customer base
of the organisation. Moreover, with the help of employee code of conduct both private and
public interest could be served. However, there are disadvantages of employee code of conduct,
as massive scandal could be been, which is been conducted by companies. Therefore, it is
estimated that code of conduct does not allow the organization to reduce unethical measures in
the company.
Part c:
a. Calculate the breakeven analysis:
Particulars Units Amount
Per unit selling price $ 60.00 $ 2,100,000.00
Per unit variable manufacturing cost $ 28.00 $ 980,000.00
Per unit variable marketing and distribution costs $ 12.00 $ 420,000.00
Per unit contribution margin $ 20.00 $ 700,000.00
Fixed Costs:
Annual fixed manufacturing costs $ 120,000.00
Annual fixed non-manufacturing costs $ 370,000.00
Total fixed costs $ 490,000.00
Break-even point (in units) 24,500.00
Break-even (in sales) $ 1,470,000.00

5ACCOUNTING FOR DECISION-MAKING
2. Calculating margin of safety:
Particulars Units
Per unit selling price (A) $ 60.00
Annual volume (B) 35,000.00
Break-even (in units) (C) 24,500.00
Margin of safety (in units) (D=B-C) 10,500.00
Margin of safety (in dollars) (E=A*D) $ 630,000.00
3. Calculating profit achieved from annual volume of 32,000 units:
Particulars Units
Annual volume 32,000.00
Per unit contribution margin $ 20.00
Total fixed costs $ 490,000.00
Profit $ 150,000.00
4. Calculating the units that would need to be sold in 2016 to achieve same profits as 2015:
Particulars Units
Per unit selling price $ 60.00
Per unit variable manufacturing cost $ 28.00
Per unit variable marketing and distribution costs $ 16.00
Contribution margin per unit $ 16.00
Annual fixed manufacturing costs $ 120,000.00

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Annual fixed non-manufacturing costs $ 290,000.00
Total fixed costs $ 410,000.00
Units to be produced for achieving the same profit 35,000.00
5: Providing relevant changes proposed in d:
The relevant recommendation of producing 35,000 units needs to be produced for
achieving the overall profits level of 2015 in 2016.
References and Bibliographies:
Collier, P. M. (2015). Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons.
Francis, B., Hasan, I., Park, J. C., & Wu, Q. (2015). Gender differences in financial reporting
decision making: Evidence from accounting conservatism. Contemporary Accounting
Research, 32(3), 1285-1318.
Hrasky, S., & Jones, M. (2016, December). Lake Pedder: Accounting, environmental decision-
making, nature and impression management. In Accounting Forum (Vol. 40, No. 4, pp.
285-299). Elsevier.
Palmer, P., Pournara, M., Espinosa, D. I., & Palmer, H. (2014). Decision making and the national
intelligence model: No accounting for decision bias. Australasian Policing, 6(2), 2.
Pettigrew, A. M. (2014). The politics of organizational decision-making. Routledge.