Number of rooms 2020 Budget $ ADR OCC RevPAR 240 2019 320 80% 256 $ REVENUE Rooms Food & Beverage Other Operated Departments Miscellaneous Income TOTAL REVENUE $ 22,425,600 $ 6,240,000 $ 480,500 $ 40,000 $ 29,186,100 DEPARTMENTAL EXPENSES Rooms Food & Beverage Other Operated Departments TOTAL DEPARTMENTAL EXPENSES $ 5,157,888 $ 3,868,800 $ 120,125 $ 9,146,813 TOTAL DEPARTMENTAL PROFITS $ 20,039,287 UNDISTRIBUTED OPERATING EXPENSES Administrative & General $ 4,669,776 Marketing $ 2,918,610 Utility Costs $ 291,861 Property Operation & Maintenance $ 350,233 TOTAL UNDISTRIBUTED OPERATING EXPENSE: $ 8,230,480 GROSS OPERATING PROFIT $ 11,808,807 Franchise Fees Management Fees $ $ 897,024 708,528 INCOME BEFORE FIXED CHARGES $ 10,203,254 SELECTED FIXED CHARGES Property Taxes Insurance Reserve For Capital Replacement $ $ $ 420,000 62,000 180,000 EBITDA Depreciation Interest Expense Income Before Income Tax Income Tax Net Income $ 9,541,254 $ 236,000 $ 20,000 $ 9,285,254 $ 2,321,314 $ 6,963,941 IstanBlue Hotel is a 240-room property with food and beverage operations. ADR is expected to be $340 and the occupancy rate to be 84% in 2020. F&B department's revenues are expected to increase by 7%. Other Operated Departments revenues are expected to increase by 5%. Miscellaneous Income of $135,000 is expected in 2020. The expected changes to the some of the expenses are as follows: The owners are planning to expand the hotel by adding 20 suites. The plan will increase the rooms revenues by $6,400,000 and increase the F&B revenues by 5-percents in 2021. The suites will increase the fixed part of Marketing expenses by $80,000, interest expense by $60,000, and the depreciation expense by $50,000 in 2020. A new position for assistant GM is projected to be open and filled by February 1, 2020. The posted salary for the position is $61,200. Cost Behavior: Room, Food & Beverage, and other operated departments expenses are directly variable with respective sales revenues. > Administrative and general: 3,000,000 is fixed (same as 2019 but consider the new salary), the remainder is variable with total revenue. Marketing: $900,000 is fixed, the remainder is variable with total revenue. Utilities cost: $127,000 fixed, the remainder is variable with total revenue. > Property Operations & Maintenance: $150,000 is fixed, the remainder is variable with total revenue. > Franchise fees: 5% of the Room's Revenue. Management fees: 6% of the GOP. The property taxes and insurance expenses are same as 2019. Capital Reserve: 1.8% of the GOP. Depreciation and interest expense are fixed (same as 2019 plus the new depreciation and interest expenses as noted above). The income tax rate is 25%. Based on given information above and the previous year's income statements, prepare the operation budget for the year 2020. Number of rooms 2020 Budget $ ADR OCC RevPAR 240 2019 320 80% 256 $ REVENUE Rooms Food & Beverage Other Operated Departments Miscellaneous Income TOTAL REVENUE $ 22,425,600 $ 6,240,000 $ 480,500 $ 40,000 $ 29,186,100 DEPARTMENTAL EXPENSES Rooms Food & Beverage Other Operated Departments TOTAL DEPARTMENTAL EXPENSES $ 5,157,888 $ 3,868,800 $ 120,125 $ 9,146,813 TOTAL DEPARTMENTAL PROFITS $ 20,039,287 UNDISTRIBUTED OPERATING EXPENSES Administrative & General $ 4,669,776 Marketing $ 2,918,610 Utility Costs $ 291,861 Property Operation & Maintenance $ 350,233 TOTAL UNDISTRIBUTED OPERATING EXPENSE: $ 8,230,480 GROSS OPERATING PROFIT $ 11,808,807 Franchise Fees Management Fees $ $ 897,024 708,528 INCOME BEFORE FIXED CHARGES $ 10,203,254 SELECTED FIXED CHARGES Property Taxes Insurance Reserve For Capital Replacement $ $ $ 420,000 62,000 180,000 EBITDA Depreciation Interest Expense Income Before Income Tax Income Tax Net Income $ 9,541,254 $ 236,000 $ 20,000 $ 9,285,254 $ 2,321,314 $ 6,963,941 IstanBlue Hotel is a 240-room property with food and beverage operations. ADR is expected to be $340 and the occupancy rate to be 84% in 2020. F&B department's revenues are expected to increase by 7%. Other Operated Departments revenues are expected to increase by 5%. Miscellaneous Income of $135,000 is expected in 2020. The expected changes to the some of the expenses are as follows: The owners are planning to expand the hotel by adding 20 suites. The plan will increase the rooms revenues by $6,400,000 and increase the F&B revenues by 5-percents in 2021. The suites will increase the fixed part of Marketing expenses by $80,000, interest expense by $60,000, and the depreciation expense by $50,000 in 2020. A new position for assistant GM is projected to be open and filled by February 1, 2020. The posted salary for the position is $61,200. Cost Behavior: Room, Food & Beverage, and other operated departments expenses are directly variable with respective sales revenues. > Administrative and general: 3,000,000 is fixed (same as 2019 but consider the new salary), the remainder is variable with total revenue. Marketing: $900,000 is fixed, the remainder is variable with total revenue. Utilities cost: $127,000 fixed, the remainder is variable with total revenue. > Property Operations & Maintenance: $150,000 is fixed, the remainder is variable with total revenue. > Franchise fees: 5% of the Room's Revenue. Management fees: 6% of the GOP. The property taxes and insurance expenses are same as 2019. Capital Reserve: 1.8% of the GOP. Depreciation and interest expense are fixed (same as 2019 plus the new depreciation and interest expenses as noted above). The income tax rate is 25%. Based on given information above and the previous year's income statements, prepare the operation budget for the year 2020