! Required information [The following information applies to the questions displayed below.] Kristin Helmud is the general manager of Highland Inn, a local mid-priced hotel with 100 rooms. Her job objectives include providing resourceful and friendly service to the hotel's guests, maintaining an 70% occupancy rate, improving the average rate received per room to $106 from the current $102, achieving a savings of 4% on all hotel costs, and reducing energy use by 8% by carefully managing the use of heating and air conditioning in unused rooms and by carefully managing the onsite laundry facility, among other means. The hotel's owner, a partnership of seven people who own several hotels in the region, wants to structure Kristin's future compensation to objectively reward her for achieving these goals. In the past, she has been paid an annual salary of $90,000 with no incentive pay. The incentive plan the partners developed has each of the goals weighted as follows: Measure Occupancy rate (also reflects guest service quality) Operating within 95% of expense budget Average room rate Energy use Percent of Total Responsibility 15% 35 35 15 100% If Kristin achieves all of these goals, the partners determined that her performance should merit a bonus of $48,000. The partners also agree that her salary will need to be reduced to $78,000 because of the addition of the bonus. The goal measures used to compensate Kristin are as follows: Occupancy goal: Compensation: Expense goal: Compensation: Room rate goal: Compensation: Energy use goal: Compensation: 25,550 room-nights 70% occupancy rate x 100 rooms x 365 days 15% weight x $48,000 target bonus = $7,200 $7,200/25,550 = $0.2818 per room-night 4% savings 35% weight x $48,000 target bonus = $16,800 $16,800/4 = $4,200 for each percentage point saved $4 rate increase 35% weight x $48,000 target bonus = $16,800 $16,800/400 = $42.00 for each cent increase 8% savings 15% weight x $48,000 target bonus = $7,200 $7,200/8 = $900 for each percentage point saved Kristin's new compensation plan will thus pay her a $78,000 salary plus 28.18 cents per room-night sold plus $4,200 for each percentage point saved in the expense budget plus $42 for each cent increase in the average room rate plus $900 for each percentage point saved in energy use. The minimum potential compensation would be $78,000 and the maximum potential compensation for Kristin would be $78,000+ $48,000 = $126,000 Required: 1. Based on this plan, what will Kristin's total compensation be if her performance results are: (Round your answers to the nearest whole dollar amount.) a. 30,000 room-nights, 4% saved, $4.00 rate increase, and 6% reduction in energy use. b. 25,000 room-nights, 2% saved, $2.15 rate increase, and 3% reduction in energy use. c. 28,000 room-nights, 0% saved, $2.00 rate increase, and 2% reduction in energy use. a. Total compensation b. Total compensation c. Total compensation

! Required information [The following information applies to the questions displayed below.] Kristin Helmud is the general manager of Highland Inn, a local mid-priced hotel with 100 rooms. Her job objectives include providing resourceful and friendly service to the hotel's guests, maintaining an 70% occupancy rate, improving the average rate received per room to $106 from the current $102, achieving a savings of 4% on all hotel costs, and reducing energy use by 8% by carefully managing the use of heating and air conditioning in unused rooms and by carefully managing the onsite laundry facility, among other means. The hotel's owner, a partnership of seven people who own several hotels in the region, wants to structure Kristin's future compensation to objectively reward her for achieving these goals. In the past, she has been paid an annual salary of $90,000 with no incentive pay. The incentive plan the partners developed has each of the goals weighted as follows: Measure Occupancy rate (also reflects guest service quality) Operating within 95% of expense budget Average room rate Energy use Percent of Total Responsibility 15% 35 35 15 100% If Kristin achieves all of these goals, the partners determined that her performance should merit a bonus of $48,000. The partners also agree that her salary will need to be reduced to $78,000 because of the addition of the bonus. The goal measures used to compensate Kristin are as follows: Occupancy goal: Compensation: Expense goal: Compensation: Room rate goal: Compensation: Energy use goal: Compensation: 25,550 room-nights 70% occupancy rate x 100 rooms x 365 days 15% weight x $48,000 target bonus = $7,200 $7,200/25,550 = $0.2818 per room-night 4% savings 35% weight x $48,000 target bonus = $16,800 $16,800/4 = $4,200 for each percentage point saved $4 rate increase 35% weight x $48,000 target bonus = $16,800 $16,800/400 = $42.00 for each cent increase 8% savings 15% weight x $48,000 target bonus = $7,200 $7,200/8 = $900 for each percentage point saved Kristin's new compensation plan will thus pay her a $78,000 salary plus 28.18 cents per room-night sold plus $4,200 for each percentage point saved in the expense budget plus $42 for each cent increase in the average room rate plus $900 for each percentage point saved in energy use. The minimum potential compensation would be $78,000 and the maximum potential compensation for Kristin would be $78,000+ $48,000 = $126,000 Required: 1. Based on this plan, what will Kristin's total compensation be if her performance results are: (Round your answers to the nearest whole dollar amount.) a. 30,000 room-nights, 4% saved, $4.00 rate increase, and 6% reduction in energy use. b. 25,000 room-nights, 2% saved, $2.15 rate increase, and 3% reduction in energy use. c. 28,000 room-nights, 0% saved, $2.00 rate increase, and 2% reduction in energy use. a. Total compensation b. Total compensation c. Total compensation

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter1: Introduction To Cost Management

Section: Chapter Questions

Problem 8P: Lily Shultz is a junior majoring in hotel and restaurant management. She wants to work for a large...

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