Module 3 Case Study

Module 3 Case Study

Assignment

This assignment requires you to apply the concepts learned in this module in a real-world setting. Please review the PDF file below for the assignment details:

Module 3 Caesars EntertainmentLinks to an external site.

Module 3 Caesars Entertainment_Data SetLinks to an external site.

Please watch the videos below for explanations of the high-low method and regression analysis:

Module 3 Case Study Videos

Module 3 – Case Study
After watching the Module 3 Case Study Videos, read the below background information for this case:
Caesars Palace® Las Vegas, owned and operated by Caesars Entertainment Corporation (CZR), opened in
1966. The Nevada hotel-and-casino complex has been featured in several movies, including Rain Man,
Iron Man, and The Hangover Part III. Caesars Palace is the 14th largest hotel in the world. Caesars
Palace® Las Vegas includes six towers (named Augustus, NOBU Hotel, Julius [formerly named Roman],
Palace, Octavius, and Forum). Beyond guest accommodations, the complex also included casinos, retail
shops, restaurants, nightclubs, a 4,296-seat entertainment venue, and a large convention facility.
Assume you work in the accounting department of Caesars Entertainment and your supervisor, Logan
Lacy, provides you with the attached Excel file containing food and beverage costs and the number of
hotel rooms/suites for Caesars for the years 1993 to 2023. Logan asks you to develop a cost
prediction model using the number of hotel rooms/suites (independent variable, x-axis) to predict
food and beverage costs (dependent variable, y-axis). Perform the analysis in Excel and think about
the related questions (3 and 4 below). Then, write a memo to Logan in Word summarizing your
findings and providing your responses to Logan’s questions.
1. Using the high-low method, calculate in Excel the following estimates:
•
Variable food and beverage cost per hotel room/suite
•
Fixed food and beverage costs per year
2. Using regression analysis in Excel, calculate the following:
•
Variable food and beverage cost per hotel room/suite
•
Fixed food and beverage costs per year
3. Logan is unsure whether it is better to use the high-low method or regression analysis. Which method
would most likely provide a better cost estimate? Explain why.
4. Logan asks for your opinion if the number of hotel rooms/suites is a good predictor of Caesars’ food
and beverage costs. Explain why or why not?
Year ended
12/31/2023
12/31/2022
12/31/2021
12/31/2020
12/31/2019
12/31/2018
12/31/2017
12/31/2016
12/31/2015
12/31/2014
12/31/2013
12/31/2012
12/31/2011
12/31/2010
12/31/2009
12/31/2008
12/31/2007
12/31/2006
12/31/2005
12/31/2004
12/31/2003
12/31/2002
12/31/2001
12/31/2000
12/31/1999
12/31/1998
12/31/1997
12/31/1996
12/31/1995
12/31/1994
12/31/1993
Food and beverage costs
1,090,956,000
895,400,000
792,850,000
880,300,000
641,000,000
1,106,000,000
555,300,000
572,000,000
399,000,000
694,000,000
639,000,000
634,000,000
665,700,000
621,300,000
596,000,000
639,500,000
716,500,000
697,600,000
482,300,000
278,100,000
255,200,000
240,600,000
232,400,000
228,000,000
218,600,000
116,600,000
103,600,000
95,900,000
91,500,000
82,800,000
76,500,000
No of hotel rooms & suites
41,640
36,185
32,852
31,950
36,780
45,920
47,460
41,730
41,180
39,218
42,200
42,710
42,890
42,010
41,830
39,170
38,130
38,060
42,870
17,220
14,780
14,551
13,598
11,562
11,760
11,685
8,197
6,478
5,736
5,367
5,348