Phase 2 Assignment Brief
Individual Task - Costing Assignment - Fairview Manor
An activity on apportionment of costs and breakeven analysis.
At the end of this activity you should be able to:-
Apportion fixed costs to several products
Use breakeven analysis to help to determine the effects of different prices
For this activity you will be working in your groups during the Pod session in week 3. There is an individual task which must be completed and submitted by the beginning of the second Pod session in week 4.
Attached are documents giving the background financial information regarding Fairview Manor and the task that you have to complete.
You are required to produce an individual report, on your own, outside the Pod session and submit it via the Assignment Submissions by the beginning of the second Pod session in week 4.
This assignment is an individual piece of work and accounts for 10% of your Phase 2 marks.
Good pieces of work will show most or all the following characteristics:
• Accurate apportionment of fixed costs and calculation of variable costs • Accurate calculation of Break Even Points and Maximum Profits • Effective use of MS EXCEL
• Clear, accurately labelled charts
• Well argued, sensible suggestions for weekly rental prices and final pricing structure.
Submit your work on your cohort BREO site before the second pod session of Phase 2, Week 4. If you have a morning pod submit before 8.45 am and if you have an afternoon pod submit before 11:45 am. Costing Activity
Universal Marketing PLC, an international timeshare marketing company, are the developers of a new Timeshare and Leisure complex, Fairview Manor, located in the West Country. The Company needs to decide upon a fair price per apartment/week for the holiday apartments which they are about to offer for sale. Katrina Petrova, the Marketing Director, at a recent Board meeting, expressed a view that a "one-off" price per apartment/week with no additional charges would make the apartments highly marketable.
The Board of Directors have agreed that all fixed costs should be apportioned (i.e. shared out) on the basis of total rooms.
The Company has carried out market research and the data that they have obtained regarding prices charged, by competitiors, for similar apartments is as follows :-
| |Studio |One Bedroom |Two Bedroom | |Weekly price range |£225 - £250 |£275 - £300 |£400 - £425 | |"On-off price" range |£6750 -£7500 |£8250 - £9000 |£12,000 - £12,750 |
The Board of Directors wish to know what the Breakeven Point for each type of apartment would be at the upper and lower ends of the price ranges. They also wish to know what the maximum profit would be for each type of apartment if all apartment/weeks were to be sold.
The Marketing Director wishes to retain some apartments on a "weekly rental only" basis. These apartments could also be used as "tasters" for future marketing campaigns, but is not sure whether the rental of an apartment/week should be the same as the price would be for someone buying an equivalent apartment/week.
The price ranges given are annual averages as actual price would vary according to season. The "one-off price" is for 30 years of ownership and has been calculated by multiplying the weekly price by 30.
The Directors have produced the attached information regarding costs, size of apartments and maximum occupancy to help with your calculations.
Universal Marketing PLC
Background Information - Fairview Manor
Information relating to costs
Cleaning materials per room per week
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