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Pirate Properties is a chain of extended stay hotel properties. The chain has 1 5 properties with an average of 2 0 0 rooms in
Pirate Properties is a chain of extended stay hotel properties. The chain has properties with an
average of rooms in each property. In the occupancy rate number of rooms filled
divided by the number of rooms available was percent, based on a day year. The
average room rate was $ for a night.
The operating income for is as follows:
In the average fixed labor cost was $ per property. The remaining labor cost was
variable with respect to the number of nights. Food and beverage cost and miscellaneous cost
are all variable with respect to the number of nights. Utilities and depreciation are fixed for each
property. The remaining costs management marketing, and other costs are fixed for the firm.
At the beginning of Pirate Properties will open four new properties with no change in the
average number of rooms per property. The occupancy rate is expected to remain at percent.
Management has made the following additional assumptions for :
The average room rate will increase by percent.
Food and beverage revenues per night are expected to decline by percent with no
change in the cost.
The labor cost both the fixed per property and variable portion is not expected to
change.
The miscellaneous cost for the room is expected to increase by percent, with no
change in the miscellaneous revenues per room.
Utilities and depreciation costs per property are forecast to remain unchanged.
Management costs will increase by percent, and marketing costs will increase by
percent.
Other costs are not expected to change.
Required:
Prepare a budgeted income statement for in Excel. Each cell should show your
calculations.
Management wants to also look at what will happen in if they raise the price to
$ a night. Management assumes that if they raise the price then they estimate that the
occupancy rate will drop to Prepare a budgeted income statement under this "high
price" strategy in Excel. Each cell should show your calculations. All other estimates
cost per night, property costs, etc. will remain the same as in requirement
Management wants to also look at what will happen in if they lower the rate to
$ At this rate they assume the occupancy rate will increase to Prepare a
budgeted income statement under this "high occupancy" strategy in Excel. Each cell
should show your calculations. All other estimates costs per night, property costs, etc.
will remain the same as in requirement
All three income statements should be on the same excel spreadsheet just in different
columns.
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