Solving first 4 sub questions.
Week nights | Weekend nights | Total | |||
Total rooms (per day) | 50 | 50 | |||
Occupancy rate | 65% | 90% | |||
Rooms occupied (per day) | 32.5 | 45 | |||
No. of days | 18 | 12 | |||
Total rooms occupied in a month (A) | 585 | 540 | 1125 | ||
Room per night charge | 80 | 80 | |||
Revenue | 46800 | 43200 | 90000 | ||
Variable cost | |||||
Housekeeping and supplies (per room night) (B) | 16 | 16 | |||
Total housekkeping expenses (A * B) | 9360 | 8640 | 18000 | ||
Breakfast served per room night | 2 | 4 | |||
Total breakfast served in a month | 1170 | 2160 | |||
Cost of per breakfast | 4 | 4 | |||
Total breakfast expenses | 4680 | 8640 | 13320 | ||
a) Total cost | RM | RM | |||
Fixed cost | |||||
Depreciation | 15200 | ||||
Administrative cost | 25980 | ||||
Housekeeping and supplies | 12000 | ||||
Breakfast | 8200 | 61380 | |||
Variable cost | |||||
Housekeeping and supplies | 18000 | ||||
Breakfast | 13320 | 31320 | |||
Total cost | 92700 | ||||
Total number of nights | 1125 | ||||
Cost per room night | 82.40 | ||||
b) (i) | |||||
Week nights | Weekend nights | Total | |||
Total rooms (per day) | 50 | 50 | |||
Occupancy rate | 75% | 90% | |||
Rooms occupied (per day) | 37.5 | 45 | |||
No. of days | 18 | 12 | |||
Total rooms occupied in a month (A) | 675 | 540 | 1215 | ||
Room per night charge | 75 | 105 | |||
Revenue | 50625 | 56700 | 107325 | ||
Variable cost | |||||
Housekeeping and supplies (per room night) (B) | 16 | 16 | |||
Total housekkeping expenses (A * B) | 10800 | 8640 | 19440 | ||
Breakfast served per room night | 2 | 4 | |||
Total breakfast served in a month | 1350 | 2160 | |||
Cost of per breakfast | 4 | 4 | |||
Total breakfast expenses | 5400 | 8640 | 14040 | ||
Total variable expesnes in revised pricing | 33480 | ||||
Total variable expesnes in old pricing | 31320 | ||||
Increase in variable cost | 2160 | ||||
Total revenue in revised pricing | 107325 | ||||
Total revenue in old pricing (1125*80) | 90000 | ||||
Increase in variable cost | 17325 | ||||
Increase in contribution margin | 15165 | ||||
So, change in pricing will be a good move as it will give additional contribution margin of RM 15165 to the motel. | |||||
(ii) Occupancy rate is higher during weekends which will lead to higher cost | |||||
Also breakfast served in twice as compared to weeknights occupancy cost of which is | |||||
14040 + 8200 = 22240 RM per month i.e. RM 18.30 per room night | |||||
C) i) | |||||
Week nights | Weekend nights | Total | |||
Total rooms (per day) | 50 | 50 | |||
Occupancy rate | 80% | 85% | |||
Rooms occupied (per day) | 40 | 42.5 | |||
No. of days | 18 | 12 | |||
Total rooms occupied in a month (A) | 720 | 510 | 1230 | ||
Room per night charge | 65 | 65 | |||
Revenue | 46800 | 33150 | 79950 | ||
Variable cost | |||||
Housekeeping and supplies (per room night) (B) | 19 | 19 | |||
Total housekeeping expenses (A * B) | 13680 | 9690 | 23370 | ||
Reduction in revenue | 10050 | ||||
Increase in variable cost | 5370 | ||||
Saving in fixed cost (8200 +3000) | 11200 | ||||
As reduction in revenue is more than saving in cost, it is not advisable to go for this option |
Ouestion 3 Rest & Fun Motel operates a 50-room motel near an amusement park. During September,...