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estration 40. Profitability Analysis - Service Industry Albcal Govemment authority owns and operates a leisure centre with numerous sporting facilities, residen accommodation, o cafeteria and a sports shop. The summer season lasts for 20 weeks including a peak perice 6 wees coresponding to the school holidays. The following budgets have been prepared for the next sumra season Accommodation: 60 single rooms let on a daily basis. 35 double rooms let on a daily basis at 160% of the single room rate. Room rote: Fixed costs 329,900. Variable costs 34 per single room per day and 36.40 per double room per day Sports centre: Residential guests each pay: 2 per day and casual visitors *3 per day for the use of facilities. Fued costs 315,500. Decision Making Techniques 365 Sports Shop: 003 ASS 705 Estimated contribution 31 per person per day. Fixed costs 38,250. Cafeteria: Estimated contribution * 1.50 per person per day. Fixed costs 12,750. During the summer season the centre is open7 day a week and the Following activity levels are anticipated. Double rooms fully booked for the whole season. Single rooms fully booked for the peak period but at only 80% of Capacity during the rest of the season. 30 casual visitors per day on average. You are required to: lal Calculate the charges for single and double rooms assuming that the authority wishes to make a 10.000 profit on accommodation. (b) Calculate the anticipated total profit for the leisure centre as a whole for the season. (c) Advise the authority whether an offer of 72,50,000 form a private leisure company to operate the centre for five years is worth while, assuming that the authority uses a 10% cost of capital and operations continue as outlined above. 38