January 2017. The GM has asked you to prepare a CVP analysis to aid in discussing next year's financial expectations at the upcoming Area Managers' Meeting. The meeting brings together 45 hotel managers and three district managers from the Southwest Region. From your managerial accounting class, you learned that break-even sales is computed using fixed costs and the unit contribution margin. Since you will be forecasting break-even for this year (2017), you need to make several adjustments to the three years of historical data you obtained. These adjustments are described as follows: Price. You examine the average seling price (i.e., average daily rate) for the past two years and decide that the hotel's room rate for next year will continue the same trend in other words, you will realize the same percentage increase (or decrease) that was experienced in the past year. For example, if your rate increased 8% from 2015 to 2016, you will then forecast the 2017 room rate to be 8% above 2016's room rate. Costs. Your hotel's variable and fixed costs are obtained from the (A) case, in which you estimated the hotel's cost equation. After consultation with industry experts, you predict fixed costs will be the same next year. Further, you expect the variable cost per room-night to increase 4%due to inflation. of local market data, you believe that sales volumes will remain flat Based on your analysis that is, the number of rooms rented in 2017 will be unchanged from the 2016 sales volume. Required 1. Compute the breakeven sales volume for 2017. 2. Calculate the margin of safety. 3. Determine the degree of operating leverage. What happens to leverage at different levels of planned sales vohume? 4. Draw aCVP plot and label the different attributes of the plot. Provide a brief interpretation of your figure. January 2017. The GM has asked you to prepare a CVP analysis to aid in discussing next year's financial expectations at the upcoming Area Managers' Meeting. The meeting brings together 45 hotel managers and three district managers from the Southwest Region. From your managerial accounting class, you learned that break-even sales is computed using fixed costs and the unit contribution margin. Since you will be forecasting break-even for this year (2017), you need to make several adjustments to the three years of historical data you obtained. These adjustments are described as follows: Price. You examine the average seling price (i.e., average daily rate) for the past two years and decide that the hotel's room rate for next year will continue the same trend in other words, you will realize the same percentage increase (or decrease) that was experienced in the past year. For example, if your rate increased 8% from 2015 to 2016, you will then forecast the 2017 room rate to be 8% above 2016's room rate. Costs. Your hotel's variable and fixed costs are obtained from the (A) case, in which you estimated the hotel's cost equation. After consultation with industry experts, you predict fixed costs will be the same next year. Further, you expect the variable cost per room-night to increase 4%due to inflation. of local market data, you believe that sales volumes will remain flat Based on your analysis that is, the number of rooms rented in 2017 will be unchanged from the 2016 sales volume. Required 1. Compute the breakeven sales volume for 2017. 2. Calculate the margin of safety. 3. Determine the degree of operating leverage. What happens to leverage at different levels of planned sales vohume? 4. Draw aCVP plot and label the different attributes of the plot. Provide a brief interpretation of your figure