A hotel operation has 120 rooms and a 100-seat restaurant. Please make a pro forma income statement for the next year to determine the forecasted net income.

Rooms department:

In the previous year of operations the occupancy rate was 70% and the average room rate was $48. The GM is forecasting the occupancy rate to increase by 5% and the average room rate is to be increased by $4. Cost of sales per room occupied is forecasted to be $8 per room. Department fixed operating expenses is estimated to be $250,000.

Restaurant department:

In the previous year the average check was $18, with an average seat turnover of 1.75. The GM is forecasting the average check to increase by $2 and seat turnover to remain the same. Costs of food and beverage and other variable operating expenses are expected to be 35% and 20% of revenue respectively. The fixed operating expenses is estimated to be $261,000 per year. The restaurant opens 300 days a year.

Company-wide undistributed expenses & fixed charges:

The indirect operating expenses and fixed charges were $300,000

and $350,000, respectively in the previous year. GM expect the indirect costs to increase by the same rate of inflation at 3.5% and no changes for fixed charges.

The tax rate is expected to be 35%.

1. Estimate Rooms department's revenue and direct costs (variable + fixed)

Forecasted occupancy rate =

Forecasted # room sold =

Forecasted ADR =

Rooms Department Income Statement:

Revenue

Variable costs: (Cost of sales)

Fixed operating expenses

Total rooms direct Costs

Rooms Department Contributory Income

2. Estimate Restaurant department's revenue and direct costs (variable + fixed)

Forecasted average check =

Restaurant Department Income Statement:

Revenue

Variable costs:

Cost of sales

Variable operating expense

Fixed operating expense

Total restaurant direct costs

Restaurant Department Contributory Income

3. Find the net income of the whole company

Consolidated Pro Forma income Statement:

Revenue:

Rooms

Restaurant

total revenue

Direct cost:

Rooms

Restaurant

Total direct cost:

Total Contributory Income

Undistributed (Indirect) operating expenses

Operating income

Fixed charges

Taxable income

Income Tax

Net income