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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Uses of managerial accounting in a service company

Priceline.com allows customers to bid on hotel rooms by “naming their price.” This “name your price” process allows customers to obtain a belter rate on a hotel room than they might be able to obtain by reserving their room directly from the hotel. The hotel can also benefit from this transaction by filling empty hotel rooms during periods of low occupancy.

Natalie Mooney bids $85 for a night’s stay at the Hotel Monaco in Seattle on Saturday August 10. The Hotel Monaco is not fully booked that evening and would likely accept any reasonable bids. How might the Hotel Monaco use managerial accounting information to decide whether or not to accept Natalie’s bid?

To determine

Managerial accounting:

Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information which are designed to meet the goals of the organization.

To discuss: Whether hotel M uses managerial accounting information to accept the person N’s bids or not.

Explanation

  • The Hotel M has excess capacity for that evening hence it is ready to accept the additional bids of customers.
  • Hotel M uses managerial accounting information to determine whether to accept the bid of person N. These could be determined by the additional cost of servicing the room, and N’s stay...

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