一道英文会计难题,

一道英文会计难题,
QUESTION THREE
You work as a manager in a two hundred room independent hotel.The hotel uses a contract laundry service for all its bedding and towels.Lately the company you use has been unreliable.Deliveries have been late causing inconvenience and once an entire consignment of your hotel’s linen was delivered to a hospital and you received the linen for the hospital.In remedying this situation the hotel was put to a great deal of expense.There is an ongoing dispute with the Laundry Company regarding the compensation for this incident.
The hotel owners wish to change to an alternative laundry contractor.You agree that the present situation is untenable but as the only other alternative is forty miles away you feel that you may be jumping “out of the frying pan into the fire”.Your favoured solution is to convert the discussed barn in the grounds of the hotel into a laundry and to employ someone to run the laundry on the premises as you believe this would give greater control and improve reliability.You have done research and have discovered the cost information below.
Conversion of Barn (no depreciation) £30,000
Supply and installation of machinery
(Twenty five year life,no residual value) £80,000
Annual maintenance contract £2,000 per year
Allowance for spare parts £500
Variable cost for each ‘piece’ of laundry
(excludes staff costs) £0.10
Average pieces processed per staff member per hour 28
Cost of staff member (fully inclusive) £5.60 per hour
Cost of manager (fully inclusive) £26,000 per year
Average occupancy 80%
Current cost of each ‘piece’ of laundry (using contractor) £0.45
Each room on average has 6 pieces per day
(cont.)
The saving will increase each year in line with inflation and the organisation is cash rich so there is no need to use a capital appraisal system that takes account of the time value of the money.
REQUIRED
Based on the information above produce a report that justifies the investment in an internal laundry service
Important factors to consider when drawing up your report:
Your report should include the payback period and the accounting rate of return.The return on investment usually sought by the owners is at least 15%.