I have part A completed I just need the required question at the end answered. Thanks
: | ||
Total Rooms available | 200 | |
Total number of days in a year | 365 | |
Total room nights | 73000 | (200 X 365) |
Occupancy Rate | 70% | |
Total number of nights occupied | 51100 | (730000 X 70%) |
Total Lodging Revenue | 11242000 | |
Average Revenue per night/per room | 220 | (11242000 / 51100) |
Increase expected in 2nd lodge | 5% | |
New average revenue per night per room | 231 | |
Total Number of nights | 102200 | (51100 for each lodge) |
Budgeted Income Statement | Notes | |
Both Lodge | ||
Revenue: | ||
Lodging | 23608200 | (51100 nights X 231X 2) |
Food and Beverage | 3892500 | (2162500 - 10%) X 2 |
Miscellaneous | 1530000 | (765000 x 2) |
Total Revenue | 29030700 | |
Costs: | ||
Labor | 6856500 | (450000+ (3597000-450000) X 2) + 25 % of 450000 |
Food and Beverage | 2940000 | (1470000 X 2) as variable to nights |
Miscellaneous | 2570400 | (918000 X 2) as variable to nights plus 40% |
Management | 212000 | All fixed |
Utilities | 5953350 | 3053000 + 95% |
Depreciation | 1622600 | 854000 + 90% |
Marketing | 2265760 | 2023000+12% |
Other Cost | 640000 | All fixed |
Total Cost | 23060610 | |
Net operating income | 5970090 |
After reviewing the budgeted income statement for 2020,
management is considering changing to one of the following two
different pricing strategies:
High Price Strategy: Increase the average price per room to $245
per night. This will reduce demand, with estimated occupancy
falling from 70% to 60%.
High Occupancy Strategy: Decrease the average price per room to
$205 per night. This will increase the occupancy rate from 70% to
80%.
All other revenues and variable costs will remain the same with
respect to the number of nights. Other costs will not change.
REQUIRED:
(1) Prepare a budgeted income statement if the “High Price
Strategy” is adopted
High price strategy | |||
Total room | 200 | ||
NO of days | 365 | ||
total room nights | 73000 | (200*365) | |
Occupancy Rate | 60% | ||
Total number of nights occupied | 43800 | (73000*60%) | |
Budgeted Income statement | both Lodge | ||
Revenue | |||
Lodging | 2,14,62,000.00 | (43800*245*2) | |
Food and Beverage | 33,36,428.00 | (2162500*43800/51100-10%*2) | |
Miscellaneous | 13,14,000.00 | (765000*43800/51000*2) | |
Total revenue | 2,61,12,428.00 | ||
Cost: | |||
Labour | 53,94,857.00 | (3597000-450000*43800/51100*2) | |
5,62,500.00 | (450000*25%+450000) | ||
Food and Beverage | 2,52,000.00 | (147000*43800/51100*2) | |
Miscellaneous | 22,03,200.00 | (918000*43800/51100*2+40%) | |
Management | 2,12,000.00 | All fixed | |
Utilities | 59,53,350.00 | 3053000 + 95% | |
Depreciation | 16,22,600.00 | 854000 + 90% | |
Marketing | 22,65,760.00 | 2023000+12% | |
Other Cost | 6,40,000.00 | All fixed | |
Total Cost | 1,91,06,267.00 | ||
Net operating Income | 70,06,161.00 | ||
I have part A completed I just need the required question at the end answered. Thanks ...
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