Solutions Manual For Accounting Essentials For Hospitality Managers 4Th Edition, (2022) By Chris Guilding, Kate Mingjie Ji| All Chapters 1-16)

SOLUTIONS MANUAL FOR ACCOUNTING ESSENTIALS FOR
HOSPITALITY MANAGERS 4TH EDITION, (2022) BY CHRIS
GUILDING, KATE MINGJIE JI| ALL CHAPTERS 1-16)
SOLUTIONS – ACCOUNTING ESSENTIALS
FOR HOSPITALITY MANAGERS (4RD
EDITION)

CHAPTER 1
INTRODUCTION
PROBLEM 1.1: SOLUTION
a) FUNCTIONAL INTERDEPENDENCY EXISTS WHEN THE PERFORMANCE OF
ONE FUNCTIONAL AREA IS AFFECTED BY THE PERFORMANCE OF A SEPARATE
FUNCTIONAL AREA. FOR EXAMPLE, IN A HOTEL COMPLEX THAT IS
DOMINATED BY A CASINO, THE SUCCESS OF THE ROOMS AND FOOD AND
BEVERAGE DEPARTMENTS WILL BE AFFECTED BY THE SUCCESS OF THE
CASINO OPERATIONS IN ATTRACTING CLIENTS TO THE COMPLEX.

b) FUNCTIONAL INTERDEPENDENCY IS AN IMPORTANT ISSUE FOR THE
DESIGNERS OF A HOTEL’S SYSTEM OF ACCOUNTABILITY BECAUSE CARE
SHOULD BE TAKEN TO HOLD A MANAGER ACCOUNTABLE FOR ONLY THOSE
ASPECTS OF THE HOTEL’S PERFORMANCE THAT HE OR SHE CAN INFLUENCE.
FOR EXAMPLE, THE HEADS OF ROOMS AND FOOD AND BEVERAGE
DEPARTMENTS SHOULD NOT BE HELD ACCOUNTABLE FOR A DECREASE IN
THEIR ROOM SALES IF IT IS CAUSED BY REDUCED CASINO ACTIVITY.


PROBLEM 1.2: SOLUTION
a) THE FOUR MAIN DIMENSIONS OF SALES VOLATILITY IN THE HOTEL INDUSTRY ARE:
1. ECONOMIC CYCLE INDUCED SALES VOLATILITY,
2. SEASONAL SALES VOLATILITY,
3. WEEKLY SALES VOLATILITY,
4. INTRA-DAY SALES VOLATILITY.

b) THE IMPLICATIONS THAT THESE DIMENSIONS OF SALES VOLATILITY
CARRY FOR HOTEL ACCOUNTING SYSTEMS ARE AS FOLLOWS:
1. ECONOMIC CYCLE INDUCED VOLATILITY: HOTEL SALES’ HIGH
SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS HIGHLIGHTS THE
IMPORTANCE OF HOTELS CAREFULLY FORECASTING ECONOMIC CYCLES
AS PART OF THE ANNUAL BUDGETING PROCESS.
2. SEASONAL SALES VOLATILITY: THREE ACCOUNTING IMPLICATIONS ARISE:
• SEASONAL SALES VOLATILITY CAN BE SO SEVERE TO WARRANT
TEMPORARY CLOSURE FOR SOME RESORT PROPERTIES. THIS
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, POSSIBILITY OF HAVING TO MAKE A CLOSURE DECISION SIGNIFIES
THAT COST AND REVENUE DATA SHOULD BE RECORDED IN A MANNER
THAT WILL ENABLE A WELL INFORMED FINANCIAL ANALYSIS OF THE
PROS AND CONS OF CLOSING.
• SEASONAL SALES VOLATILITY CAN ALSO POSE PARTICULAR CASH
MANAGEMENT ISSUES. DURING THE MIDDLE AND TAIL-END OF THE
BUSY SEASONS, SURPLUS CASH BALANCES ARE LIKELY TO RESULT,
WHILE IN THE OFF-SEASON AND THE BUILD UP TO THE BUSY SEASON,
DEFICIT CASH BALANCES ARE LIKELY TO RESULT. CAREFUL CASH
BUDGETING WILL THEREFORE NEED TO BE CONDUCTED.




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,Accounting Essentials for Hospitality Managers (C. Guilding) Solutions



• SEASONAL SALES VOLATILITY WILL ALSO AFFECT PRICE
DISCOUNTING DECISIONS. TO ENSURE SUCH DECISIONS ARE WELL
INFORMED, CAREFUL FORECASTING AS PART OF THE ANNUAL
BUDGETARY PROCESS, WILL HAVE TO BE CONDUCTED.
3. WEEKLY SALES VOLATILITY: ACCURATE FORECASTING OF WEEKLY SALES
VOLATILITY WILL INFORM MANAGEMENT’S DECISION MAKING WITH
RESPECT TO THE AMOUNT AND TIMING OF ROOM RATE DISCOUNTING,
STAFFING NEEDS AS WELL AS RESTAURANT PURCHASING NEEDS.
4. INTRA-DAY SALES VOLATILITY: INTRA-DAY DEMAND VOLATILITY HAS
LED TO WIDELY-USED PRICING STRATEGIES SUCH AS “EARLY BIRD
SPECIALS” IN RESTAURANTS AND “HAPPY HOURS” IN BARS. RECORDS
CONCERNING DEMAND AT DIFFERENT TIMES OF THE DAY WILL HAVE TO
BE MAINTAINED IN ORDER TO INFORM SUCH HOTEL PRICING ISSUES.


PROBLEM 1.3: SOLUTION
EXAMPLES OF BUSINESS DECISIONS REQUIRING THE USE OF FINANCIAL ACCOUNTING
DATA INCLUDE:
(a) A BANK MANAGER DECIDING WHETHER TO LEND MONEY TO A COMPANY.
(b) A SHAREHOLDER DECIDING WHETHER TO SELL HER SHARES DUE
TO A FEAR THAT THE COMPANY SHE HAS INVESTED IN MIGHT GO
BANKRUPT.
(c) A POTENTIAL SHAREHOLDER THINKING ABOUT PURCHASING
SHARES IN A COMPANY AND INTERESTED IN DETERMINING IF THE
COMPANY IS PROFITABLE.
EXAMPLES OF BUSINESS DECISIONS REQUIRING THE USE OF MANAGEMENT
ACCOUNTING DATA INCLUDE:
(a) DETERMINING WHETHER ACCOUNTS ARE BEING COLLECTED ON TIME.
(b) DETERMINING WHETHER THE BUSINESS WILL HAVE SUFFICIENT
CASH OVER THE NEXT YEAR TO AVOID THE NEED TO ARRANGE A
LINE OF CREDIT.
(c) DETERMINING WHETHER A DRINKS VENDING MACHINE OR A
CONFECTIONARY VENDING MACHINE SHOULD BE INSTALLED IN A
HOTEL’S FOYER AREA.
(d) DETERMINING WHAT ROOM RATE TO CHARGE TO ACHIEVE A TARGET LEVEL
OF PROFIT.
(e) DETERMINING WHETHER A SEASONAL HOTEL SHOULD BE CLOSED
DOWN DURING THE QUIET SEASON.
(f) DETERMINING WHETHER A RESTAURANT MANAGER IS PERFORMING WELL.



PROBLEM 1.4: SOLUTION
a) HIGH PRODUCT PERISHABILITY SIGNIFIES THAT AN ITEM CANNOT BE HELD
IN INVENTORY FOR SALE AT A LATER TIME. FOOD ITEMS HAVE A LIMITED
LIFE IN INVENTORY BECAUSE OF THEIR RAPID PHYSICAL DETERIORATION.
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, Accounting Essentials for Hospitality Managers (C. Guilding) Solutions
ROOM NIGHTS AND CONFERENCE FACILITIES CANNOT BE PLACED IN
INVENTORY BECAUSE THEY RELATE TO A PARTICULAR TIME PERIOD THAT
EXPIRES.

b) THE ABSOLUTE PERISHABILITY OF ROOMS, CONFERENCE AND BANQUET
FACILITIES AND THE RELATIVE PERISHABILITY OF FOOD UNDERLINES THE
IMPORTANCE OF ACCURATE HOTEL DEMAND FORECASTING AS PART OF THE
BUDGETING PROCESS. GENERALLY, THE MOST IMPORTANT ASPECT OF
FORECASTING IS ROOM OCCUPANCY, AS ROOM SALES DRIVE SALES LEVELS
OF OTHER HOTEL SERVICES. ACCURATE RESTAURANT FORECASTING
PROVIDES THE BASIS FOR MAINTAINING A FULL MENU OF OPTIONS WHILE
ALSO MINIMISING THE COST OF FOOD WASTAGE.




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