Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Read the given information carefully, and provide your answer to the following questions. Since the same set of information will be continuously used for many

image text in transcribed

Read the given information carefully, and provide your answer to the following questions. Since the same set of information will be continuously used for many questions that follow, it is recommended to prepare the complete set of the structure on a separate piece of paper. The owner of a local motel asked you to help him set up his budget with the following information. Its monthly Fixed Cost amount is $180,000, while its Variable Cost is $25 per room sold. Due to the seasonality of the business, the room rate ranges from $90 to much lower price depending on the number of expected guests. As a slow month is approaching, the owner will reduce his ADR to $75 to sell 6,000 rooms. However, the Variable Cost per room will remain the same due to the predetermined labor schedule. Using the information provided, complete the Pro Forma Income Statements (Operating Budget); and provide your answer to the question below. (If the data shows broken on your screen, please use Zoom-in/out function to have it displayed correctly. Or you also may need to expand it to the full-screen mode.) Slow month (6,000 rooms to sell @ lowered ADR of $75) Vertical Analysis (%) Revenues: (a) XXXXXX Variable Cost ($25 per room): __(b)___ (h) Contribution Margin: (c) (0) Fixed Cost: (d) - 0.- EBT: le) (k) Tax (30%) (f) XXXXXX Net Income: (g) (0)___ Provide your answer to the amount of (g: Net Income). (Do not put "$" or ","in your answer. Just put the number. If you answer is $1,000,000 then put 1000000. If your answer is negative, put "-" as in - 1000000)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Tony Davies, Ian Crawford

1st Edition

0273723073, 9780273723073

More Books

Students also viewed these Accounting questions