Decision tree | Accounting homework help

 The “Ferrara Calabria” is an outdoor high-end seafood restaurant located in a small resort town on the shore of the Mediterranean Sea. The restaurant is considering whether to sign a contract with a hugely popular jazz quintet “Solerno Jazz” that would play for 12 summer weeks from June to August 2021. “Ferrara Calabria” has to choose between two options: the contract for performance on Friday nights and the contract for performance on Saturday & Sunday nights. The contract should be signed by the end of December 2020. The “Solerno Jazz” consists of five musicians whose charges per performance on Friday night are the following: Piano EUR 195 Saxophone EUR 175 Drums EUR 160 Guitar EUR 200 Vocalist EUR 230 Charges for Saturday performance are higher by 70% whereas for Sunday performance – 2 times higher compared with Friday prices The restaurant’s accountant Emily Bronte has been asked to evaluate the financial effects of the decision to hire the jazz band. The accountant has made the following estimates An increase in the number of clients attending the restaurant on a day of “Solerno Jazz” performance is uncertain, but it has been initially hestimated as follows: Clients 5 Friday Probability 10% 25 % 30% 35% Saturday Probability Clients 15 % 15 20 % 20 30 40 % 25 Sunday Probability Clients 20 % 15 25 25 30.96 30 25 35 25 % 25 15
Using available data on revenues earned in previous years, Mrs. Bronte has calculated that the average amount of money spent by each client was EUR 95 on Fridays, EUR 102 on Saturdays and EUR 109 on Sundays. As live music would induce clients to stay longer and spend more money, Mrs. Bronte budgets a 20 % increase in their Friday’s bills and a 25 % increase in their Saturday’s and Sunday’s bills in summer 2021
To accommodate a stage for the jazz quintet and additional clients whom the restaurant wants to attract the “Ferrara Calabria” needs more room. It can be rented from the landlord at a daily price of EUR 220 per Friday and EUR 300 per Saturday and Sunday. Due to a high demand for property in summer months, a lease contract must be signed by December 15, 2020. Mrs. Bronte believes that “Ferrara Calabria” decision to hire the jazz band will provoke an immediate reaction from competing restaurants who will struggle against a potential decrease in their market share. There is 55 % probability that competitors will react if the “Solerno Jazz” is hired on Fridays and 75 % probability that their reaction will follow if the “Solerno Jazz” is hired on Saturdays and Sundays. The impact of competitors’ activities on “Ferrara Calabria” revenues from additional clients is estimated as follows: 35 % probability that the “Ferrara Calabria” will fail to attract any additional clients, 35 % probability that its revenues will constitute only 50 % of the budgeted amount: 30 % probability that competitors’ activities will not have any impact on “Ferrara Calabria” revenues.
(b) Based on the calculated expected values, determine whether the “Ferrara Calabria” should hire the jazz band “Solerno Jazz” or maintain the current status quo. If the restaurant decides to choose the corbact, which contract should it choose and why? (30 marks) (c) With reference to this case study of the Ferrara Calambria”, explain how the drawbacks of a decision tree method might limit its usefulness to decision making under risk. (10 marks 

Premium Custom Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.