Question
Based on the income statement and the information below: The income tax rate is 25%. Number of rooms is 240, and hotel operates at 80%
Based on the income statement and the information below:
The income tax rate is 25%. Number of rooms is 240, and hotel operates at 80% occupancy.
Room, Food & Beverage, and Other Operated Department expenses are directly variable with total sales revenue.
Administrative & General: $2,400,000 is fixed, the remainder is variable with total revenue.
Marketing $1,240,000 is fixed, the remainder is variable with total revenue.
Utilities cost: $180,000 is fixed, the remainder is variable with total revenue.
Property Operations & Maintenance: $188,000 is fixed, the remainder is variable with total revenue.
Assume both franchise fees and management fees to be fixed.
Answer the following questions.
- What is the revenue at breakeven point?
- At breakeven point, what would the room revenues be?
- At breakeven point, what is the occupancy at $320 ADR?
- What revenue is required to achieve desired operating income (income before income tax) of $12,000,000?
- If the operating income (income before income tax) of $12,000,000 achieved, how much would the food and beverage revenue be?
- If rooms and food & beverage revenues increase by 10% and 15%, respectively, through price increases, what would the new breakeven be?
- If fixed cost increases by $2,400,000, how much addtional revenues is needed to cover the additional fixed expenses?
- What would the required revenue be if a net income of $9,000.000 is desired?
- What would the occupancy rate be if a net income of $9,000,000 is achieved at $320 ADR?
- If the depreciation expense decreases by 100,000, what would the breakeven point be?
- If the hotel reduces all departmental expenses by 10%. what would the new breakeven be?
- What would the required revenue be if a net income of $10.000,000 is desired and at the same time the fixed expenses incease by $1.200.000?
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