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FMH810S- FINANCIAL MANAGEMENT- HOSPITALITY AND TOURISM- 2ND OPP- JUNE 2023 |
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nAmlBIA un1VERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCE AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING & FINANCE
QUALIFICATION: BACHELOR OF HOSPITALITY MANAGEMENT (HONOURS)
QUALIFICATION CODE: 0SBHTH
COURSE CODE: FMH810S
LEVEL: 8
COURSE NAME: FINANCIAL MANAGEMENT:
HOSPITALITY AND TOURISM
SESSION: JULY 2023
DURATION: 3 HOURS
PAPER: PRACTICAL AND THEORY
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
H Namwandi
MODERATOR: A Okafor
INSTRUCTIONS
• This question paper is made up of four (4) questions.
• Start each question on a new page.
• Answer All the questions in blue or black ink only.
• You are advised to pay due attention to expression and presentation. Failure to do so will
cost you marks.
• Start each question on a new page in your answer booklet and show all your workings.
• Questions relating to this paper may be raised in the initial 30 minutes after the start of
the paper. Thereafter, candidates must use their initiative to deal with any perceived error
or ambiguities and any assumption made by the candidate should be clearly stated.
PERMISSIBLE MATERIALS
Non-programmable calculator
THIS QUESTION PAPER CONSISTS OF 5 PAGES (Including this front page)
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Question 1
25 Marks
HS manufactures components for use in computers. The business operates in a highly
competitive market where there are a large number of manufacturers of simial components.
HS is considering its pricing strategy for the next twelve weeks for one of its components. The
managing director seeks your advice to determine the selling price that will maximise the profit
to be made during this period.
You have been given the following data:
Market Demand
The current selling price of the component is N$1 350 and at this price, the average weekly
demand over the last four weeks has been 8 000 components. An analysis of the market
shows that for every N$50 increase in selling price, the demand reduces by 1 000 components
per week. Equally, for every N$50 reduction in selling price the demand increases by 1 000
components per week.
Costs
The direct material cost of each component is N$270. This price is part of a fixed-price contract
with the material suppliers and the contract does not expire for another year.
Production labour and overheads costs and the corresponding output volumes have been
collected for the last four weeks and they are as follows:
Week
1
2
3
4
Output volume (units)
9 400
7 600
8 500
7 300
N$
7 000 000
5 688 000
6 334 000
5 446 000
No significant changes in cost behaviour are expected over the next twelve weeks.
REQUIRED:
(a) Advise the management of HS Manufacturer Ltd on the optimum selling
price that should be charqed to customers in order to maximise profit.
(b) List and explain to the managing director of HS manufacturing the
different forms of financing that they can use to raise capital for the
company.
(c) Briefly explain what is agency theory.
Total
Show all your workings!
Marks
(16)
(6)
(3)
25
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Question 2
15 Marks
You have recently been appointed as an independent business adviser of Tropizone (Pty) Ltd,
a company that designs and manufactures water bottles. Your appointment was made
because Tropizone (Pty) Ltd has just been awarded a tender in January 2023 to be the official
manufacturer of water bottles for the Namibia Wildlife Resorts (NWR). The water bottles will
be handed out to all resorts during April 2023. This is part of a campaign to promote healthy
habits amongst NWR customers. It might become an annual tender in future. Therefore,
Tropizone (Pty) Ltd requires a business adviser expert to assist in the implementation of a
good Management Control System (MCS) to ensure that they always win the tender.
The management of Tropizone (Pty) Ltd informed you that at the moment the organisation
does not have any strategic management control system in place regarding the effective
running of the tender process. Management of Tropizone (Pty) Ltd wants a control system put
in place to ensure that everyone working in the organisation carries out the organisation's
objectives and strategies.
REQUIRED:
(a) List and explain to the management of Tropizone (Pty) Ltd the different
elements of the control system. Also, give a key example of each element
related to the tender that they are undertakinQ.
(b) List three factors that influence the management control system
Marks
(12)
(3)
Total
15
Question 3
30 Marks
Protea Hotel by Marriott Walvis Bay Pelican Bay overlooks the wetland coastline of Walvis
Bay Lagoon, a protected naturalistic area. It features a spa with massage treatments, nearby
golf facilities and windsurf equipment. Decorated in soft pastel tones, rooms at Protea Hotel
by Marriott Walvis Bay Pelican Bay are well presented with a clean lay-out. Situated among
the green surroundings of the Esplanade Park, Protea Hotel by Marriott Walvis Bay Pelican
Bay is renowned for dolphin's spotting and the abundance of majestic flamingos in its environs.
Protea Hotel by Marriott Walvis Bay Pelican Bay needs to prepare its cash budget for the next
three months. The following information is available.
Estimated sales
June
Julv
Auqust
September
N$
25 000
27 200
34 000
33 600
Estimated purchases
June
July
AUQUSt
September
N$
6 900
7 560
5 780
6 300
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Additional information:
• Direct wages amount to N$13 000 per month and are paid in cash as they occur.
• Badger sells 20% of all goods on cash; the remainder of customers have one month
of credit
• Suppliers are paid in the month after purchase.
• Overheads are N$6 400 per month and Badger is allowed one month's credit on
overheads. A depreciation of N$6 000 is included in the amount of overheads.
• Selling, distribution and administrative costs are N$3 780 per month and are paid in
cash in the month in which they occur.
• Badger wishes to purchase a new vehicle in August with a cash payment of N$120
000.
• The cash balance for the end of June is expected to be N$90 500.
REQUIRED:
(a) Prepare a cash budget for Protea Hotel by Marriott Walvis Bay Pelican
Bay for the months of July to September.
(b) List other fives types of budgets apart from the cash budget that an
organisation in the production sector may need to prepare.
Total
Show all vour workin~s!
Marks
(25)
(5)
30
Question 4
30 Marks
CNC Ltd is currently studying the investment possibilities of a proposed project. The project
will be for a period of eight years and will require investment in a specific machine which has
a purchase price of N$1 600 000. The machine has an eight-year lifespan, after which it will
have an estimated salvage value of N$240 000. The company requires a minimum rate of
return of 18% on all new projects.
It is further estimated that the project will yield a gross income of N$400 000 per year,
calculated as follows:
Sales
Less Cost of goods sold (excluding depreciation)
Gross cash income
N$
3 000 000
2 600 000
400 000
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REQUIRED:
Compute the following with regard to the project:
(a) The annual net profit.
(b) The net present value. Also, make a recommendation on whether the
project is acceptable or not.
(c) The internal rate of return. Interpolate to one decimal place.
(d) The payback period. State whether the project is acceptable if the
company requires a maximum payback period of three years.
(e) The discounted payback period. (Round answers to two decimals)
(f) The accounting rate of return on average investment.
Total
Show all vour workinas!
Marks
(3)
(7)
(7)
(3)
(8)
(2)
30
THE END
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PresentValueTable
Present value of 1 i.e. (1 + r)-n
Where
r = discount rate
n = number of periods until payment
Discountrate (r)
Periods
(n)
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
1 0·990 0·980 0·971 0·962 0·952 0·943 0·935 0·926 0·917 0·909
1
2 0·980 0·961 0·943 0·925 0·907 0·890 0·873 0·857 0·842 0·826
2
3 0·971 0·942 0·915 0·889 0·864 0·840 0·816 0·794 0·772 0·751
3
4 0·961 0·924 0·888 0·855 0·823 0·792 0·763 0·735 0·708 0·683
4
5 0·951 0·906 0·863 0·822 0·784 0·747 0·713 0·681 0·650 0·621
5
6 0·942 0·888 0·837 0·790 0·746 0·705 0·666 0·630 0·596 0·564
6
7 0·933 0·871 0·813 0·760 0·711 0·665 0·623 0·583 0·547 0·513
7
8 0·923 0·853 0·789 0·731 0·677 0·627 0·582 0·540 0·502 0·467
8
9 0·914 0·837 0·766 0·703 0·645 0·592 0·544 0·500 0·460 0·424
9
10 0·905 0·820 0·744 0·676 0·614 0·558 0·508 0-463 0·422 0·386 10
11 0·896 0·804 0·722 0·650 0·585 0·527 0·475 0·429 0·388 0·350 11
12 0·887 0·788 0·701 0·625 0·557 0·497 0·444 0·397 0·356 0·319 12
13 0·879 0·773 0·681 0·601 0·530 0-469 0·415 0·368 0·326 0·290 13
14 0·870 0·758 0·661 0·577 0·505 0·442 0·388 0·340 0·299 0·263 14
15 0·861 0·743 0·642 0·555 0·481 0·417 0·362 0·315 0·275 0·239 15
(n)
11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0·901 0·893 0·885 0·877 0·870 0·862 0·855 0·847 0·840 0·833
1
2 0·812 0·797 0·783 0·769 0·756 0·743 0·731 0·718 0·706 0·694
2
3 0·731 0·712 0·693 0·675 0·658 0·641 0·624 0·609 0·593 0·579
3
4 0·659 0·636 0·613 0·592 0·572 0·552 0·534 0·516 0·499 0·482
4
5 0·593 0·567 0·543 0·519 0·497 0-476 0·456 0·437 0·419 0·402
5
6 0·535 0·507 0·480 0·456 0·432 0·410 0·390 0·370 0·352 0·335
6
7 0-482 0-452 0·425 0·400 0·376 0·354 0·333 0·314 0·296 0·279
7
8 0·434 0·404 0·376 0·351 0·327 0·305 0·285 0·266 0·249 0·233
8
9 0·391 0·361 0·333 0·308 0·284 0·263 0·243 0·225 0·209 0·194
9
10 0·352 0·322 0·295 0·270 0·247 0·227 0·208 0·191 0·176 0·162 10
11 0·317 0·287 0·261 0·237 0·215 0·195 0·178 0·162 0·148 0·135 11
12 0·286 0·257 0·231 0·208 0·187 0·168 0·152 0·137 0·124 0·112 12
13 0·258 0·229 0·204 0·182 0·163 0·145 0·130 0·116 0·104 0·093 13
14 0·232 0·205 0·181 0·160 0·141 0·125 0·111 0·099 0·088 0·078 14
15 0·209 0·183 0·160 0·140 0·123 0·108 0·095 0·084 0·074 0·065 15
6