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18-22 Phelps Glass Inc has reported the
following financial data_20-38 Ramon
Martinez is the general manager Answer

18-22 Phelps Glass Inc has reported the following financial data: net revenues of
$10million, variable cost of $ 5 million, controllable fixed cost of $2 million, noncontrollable fixed cost $1 million, and untraceable cost of $500,000. The accounting
manager has supplied you with this data and asked you to come up with the controllable
margin total contribution, cpc, and operating income.
20-38 Ramon Martinez is the general manager of classic Inn, a local mid-priced hotel with
100rooms. His job objective include providing resourceful and friendly service to the
hotels guess maintaining an 80 percent occupancy rate, improving the average rate
received per room to $88 from $85 and achieving saving of 5 percent on all hotel cost. The
hotel owner a partnership of seven people who own several hotels in the region, want to
structure Ramons future compensation to objectively reward him for achieving these
goals. In the past, he has been paid an annual salary of $ 72,000 with no incentive pay.
The incentive plan the partners developed has each of the goals weighted as followed.
Measure Percent of total Responsibility
Occupancy rate (also reflects guest services quality) 40%
Operating within 95 percent of expense budget 25
Average room rate 35
100
If Ramon achieves all of these goals, the partner determined that his performance should
merit a bonus of $23,000. The partner also agreed that his salary would be reduced to
$60,000 because of the addition of the bonus. The goal measures used to compensaste
Ramon are as follows:
Occupancy Goal: 29,200 room-nights=80 percent occupancy rateX100 roomsX365 days
Compensation: 40 percent weight $23,000 target reward= $9,200 $9,200/29,200=$0.315 per
room night

Expense goal:5 percent savings

Compensation: 25 percent weight $23,000 target reward=$5,750 $ 5,750=$1150 for each
percentage point saved
Room rate goal: $3 increase
Compensation: 35 percent weightx $23,000 target reward=$88,050 $88050/300=$26.83 per
each cent increase.
Ramonn new plan compensation plan will thus pay him $60,000 salary plus 31.5 cents per
room night sold plus $1,150 for each percentage point saved in the expense budget plus
$26.83 per each cent increase in average room rate.Required 1. Based on this plan, what
will Ramons total compensation be if his performance results are.
A. 30, 000 room-nights, 5 percent saved $ 3.00 rate increase?
B. 25, 000 room nights, 3 percent saved $1.15 rate increase?
C. 28,000 room nights 0 saved $1.00n rate increase
2. Comment on the expected effectiveness of this plan. Submit your assignment using a
single Excel workbook. Place each exercise/problem on a separate tab (sheet).

18-22 Phelps Glass Inc has reported the

following financial data_20-38 Ramon
Martinez is the general manager Answer