Question

a. When an operation's total fixed and variable costs...

	A.	are greater than its revenue, the breakeven point has been reached.
	B.	are less than its revenue, the breakeven point has been reached.
	C.	equal to its opportunity costs, the breakeven point has been reached.
	D.	equal its revenue, the breakeven point has been reached/

b. A regional director of marketing allocated their $12,000 per month salary to three properties that they are responsible for. The allocation is based upon each property's room count. Hotel A has 450 rooms. Hotel B has 375 rooms. Hotel C has 550 rooms. How much of the regional marketing director's monthly salary will be charged to Hotel C?

	A.	$4,000
	B.	$3,925
	C.	$3.275
	D.	$4,800

c. When they are calculated as a percentage of sales, a hospitality operation's costs are...

	A.	reduced when sales are high and are increased when sales are low.
	B.	stay the same when sales are high and are reduced when sales are low.
	C.	increased when sales are high and are reduced when sales are low.
	D.	reduced when sales are high and stay the same when sales are low.

d. Which is an example of a non-controllable cost?

	A.	Linen cost per occupied room
	B.	Housekeeping wages
	C.	Housekeeping salaries
	D.	Laundry equipment depreciation

Answer 1

a. When an operation's total fixed and variable costs...

D.	equal its revenue, the break-even point has been reached/

Explanation : Break-even is a position of no profit and no loss, therefore when total cost (fixed and variable cost) = total revenue, there is no profit / no loss.

b. How much of the regional marketing director's monthly salary will be charged to Hotel C?

D.

$4,800

Explanation :

Total Salary Allocation	12000
Total Rooms (450+375+550)	1375
Salary Charged / room (12000/1375)	8.72727272727273
Salary Charged to Hotel C (550*8.72727272727273)	4800

c. When they are calculated as a percentage of sales, a hospitality operation's costs are...

C.	increased when sales are high and are reduced when sales are low.

Explanation : When costs are as percentage of sales, they move in line with sales, that means they increase with sales and decrease with sales.

For example : If costs are 25% of sales then at different sales, costs will be

Sales	Cost
2000	500 (2000*25%)
1000	250 (1000*25%)
3000	750 (3000*25%)

Where cost reduced from 500 to 250 will decrease in sales and increased from 250 to 750 with increase in sales.

d. Which is an example of a non-controllable cost?

D.	Laundry equipment depreciation

Explanation : uncontrollable cost means costs over which a person has no direct control, a person may have control over purchasing a new asset, but once it is purchased there is no control over its depreciation.

Whereas salary, wages and linen can be controlled with the level of production and usages, if room is unoccupied linen is not required, and if there is less work, no need to hire staff.