D E F A B 1 The condensed income statement of MCU Hotel 2 w N 3 4 5 6 7 8 9 9 Rooms Food Other Gift Shop Total Departmental Income Other Variable Expenses* Other Fixed Costs** Pretax Income Income Taxes Net Income Revenue Variable CostsFixed CostsDepartment Income 4,000,000 800,000 200,000 3,000,000 2,400,000 1,000,000 400,000 1,000,000 300,000 200,000 100,000 300,000 150,000 100,000 50,000 4,050,000 700,000 2,800,000 550,000 200,000 350,000 10 11 12 13 14 15 16 * Management Fees (10 percent of total sales) ** Includes depreciation of $1,000,000 17 18 19 20 21 1 Compute the MCU Hotel's weighted CMR 2 Compute the MCU Hotel's breakeven point 3 Compute the total sales required to yield a pretax cash flow of $2,000,000. Assume a single payment during the accounting period to reduce the mortgage was for $200,000. Also assume other non-expense cash disbursements of $100,000. 22 23 24 25 26 ANSWER 27 1 Total Revenue = 7000000.00 28 Total variable costs = 29 CMRw = 1.00 30 31 2 Total fixed costs = 32 CMRw = 1.00 33 Breakeven revenue = 0.00 34 35 3 CFb (Desired cash flow before taxes) = 2,000,000 36 F (Fixed costs (including depreciation) = 37 NCE (Noncash expenses) 1000000.00 38 NECD (Non-expense cash disbursements) = 39 CMRW = 1.0000 40 Required sales = 2000000.00