Reference no: EM132561365

a) Straight-to-Heaven church is planning its annual camp meeting in December 2017. The church has four branches and the annual camp meeting is the first major programme after all the head pastors attended a leadership conference on the theme "Blending faith and Science in Church Decision Making."

The General overseer of the church wishes to apply the scientific principles learnt at the conference in deciding between two major venues for 2017 annual comp meeting. Hitherto, the general overseer or his wife would veto where annual camp meetings are held. The following information are relevant for the decision.

i) Seven pastors will facilitate the Camp meeting. 'Food 4 All' restaurant will be assigned the responsibility of providing food for the pastors. They have indicated that a meal for a pastor would cost GH¢5. This cost is expected to increase by one-half if a pastor attends the camp with his wife. All pastors will be fed three times daily but only three pastors plan to attend the conference with their wives. Church members will take care of their own feeding but all camp expenses of pastors will be borne by church members.

ii) Water to be served at the camp meeting. 100bags of sachet water at GH¢2 each and 25 boxes of 750mil bottled water at GH¢13 per box.

iii) The church plans to either have the conference at Ahayede (A) or Bonebon (B) camp sites. Accommodation cost per head per day at Ahayede is GH¢2 for the first 400 participants and GH¢1.5 for any additional participant. Bonebon will not charge any fee but the church will have to show appreciation, which will be in the neighbourhood of GH¢2,000 after the camp.

iv) Ahayede Campsite will require the payment of electricity and water bills of GH¢300 and GH¢500 respectively.

v) It is expected that 96 litres of fuel at GH¢3.12 per litre will be needed at Bonebon campsite.

vi) Transportation cost for chairs and canopies will be GH¢400 if the camp is undertaken at Ahayede and GH¢300 if the camp is sited at Bonebon. Each church member's transportation cost will be GH¢3 if Ahayede is chosen as the venue but this figure is expected to double if the camp is taken to Bonebon.

vii) Pastors' appreciation. Apart from the general pastor who will receive GH¢500, each pastor will receive GH¢300 as appreciation support.

viii) The church plans that 700 church members and pastors will take part in the annual camp meeting if it is undertaken at Bonebon while 500 members will attend the camp if it is held at Ahayede even though the two camp sites can each take 1,000 people. The camp will last for 5 days.

Required

Question i) Using relevant costing, advise management of the church the site they should hold the annual camp meeting.

Question ii) Suggest TWO qualitative factors that should be considered on deciding on the venue.

Question iii) Explain the term sunk costs and identify TWO examples of sunk costs.