Problem 18-2

The Springs Hotel (TSH) has a 20% market share in a tri-county area of Western Colorado. Simplified income statements for TSH and the lodging industry for the tri-county area are as follows:

					000s
				TSH		Industry
Sales				$ 50,000		$ 200,000
Cost of sales			$ 5,000		$ 25,000
Labor costs			$ 15,000		$ 64,000
Other operating costs				$ 10,000		$ 30,000
Fixed charges			$ 15,000		$ 50,000
Income before income taxes		$ 5,000		$ 31,000
Income taxes			$ 1,000		$ 6,000
Net income			$ 4,000		$ 25,000

REQUIRED

1. Prepare the common-sized income statements for both TSH and the lodging industry.
2. What areas appear to require the attention of TSHs management?