Explain your reccomendation to the owners based on the calculations. The owners of the Kempenfelt Bay Resort are contemplating closing the resort in the 4th quarter i a three-month vacation. The owner has asked for your advice and after an analysis of the 4th quar Wages & Salaries Expense: $3,500 is a fixed cost of key personnel who would be kept on the payro three months. Supplies expense: Costs varies directly with sales revenue; none of the suplies cost is fixed. Advertising Expense: $300 of Advertising cost is fixed; the rest of the cost is variable. Utilities Expense: Even if closed for three months, the resort will still require some heating; this is Maintenance Expense: Some light maintenance is required during the closed period with an estim Insurance expense: Insurance cost will be reduced 50% if closed for the three months. Depreciation expense: With less customer traffic and reduced wear and tear, there would be a 75 for the fourth quarter. Interest Expense: Will still have to pay, even if it's closed for 3 months. Rent Expense: This is an annual expense of $20,000 that MUST be paid, regardless of whether the Sales revenue Cost of Sales Gross Margin Operating Expenses: Payroll Expense Supplies Expense Advertising Expense Utilities Expense Maintenance Insurance expense Interest Expense Depreciation Rent Expense Total Op. Expenses I.B.I.T 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $89,400 $40,000 $97,000 35,900 33,100 20,100 $61,100 $56,300 $19,900 $86,400 32,800 $53,600 32,000 1,900 900 2,600 450 1,200 750 700 5,000 $45,500 $8,100 35,900 2,200 900 2,900 450 1,200 750 750 700 700 5,000 5,000 $50,000 $46,700 33,100 1,970 900 2,680 400 1,200 $11,100 $9,600 17,800 1,100 600 2,400 400 1,200 750 700 5,000 $29,950 -$10,050 Totals $312,800 121,900 $190,900 118,800 7,170 3,300 10,580 1,700 4,800 3,000 2,800 20,000 $172,150 $18,750 If business will stay open on 4th quarter, then they will not be profitable during whole year.