Question
GC Hotel Holding Company has 2 hotel chains: a luxury chain and a economy chain. The luxury chain represents 60% of its revenue, and provides
GC Hotel Holding Company has 2 hotel chains: a luxury chain and a economy chain. The luxury chain represents 60% of its revenue, and provides a contribution margin ratio of 30%. The economy chain provides 40% of its revenue, and provides a 45% contribution margin ratio. The company's fixed costs are $8,100,000
- What is the weighted average contribution margin ratio?
- What is the breakeven sales in dollars?
- To achieve breakeven for the company, what is the revenue the luxury chain must achieve?
- To achieve breakeven for the company, what is the revenue the economy chain must achieve?
- If the company has a desired income of $1,800,000, what amount of revenue would CG Hotel Holding Company earn from the economy chain if they achieve this goal with the current sales mix?
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Cost management a strategic approach
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