SHA Hotel

For the year ended December 31, 20X1

Given this information, use CVP analysis to calculate each of the following situations for the SHA Hotel:

1. Weighted average contribution margin ratio

2. Determine the breakeven point

3. Total revenue to yield a net income of $500,000 (The effect of income taxes on net income must be accounted for, assuming the SHA hotels income tax rate is 20%)

4. Room revenues when profit equals $500,000

5. Breakeven point if fixed costs increased by $300,000

SHA Motel For the year ended December 31, 20X1 Revenue VC FC $5,000,000 3,000,000 500,000 1,000,000 1,000,000 200,000 500,000 1,000,000 100,000 Department Income 3,500,000 1,000,000 200,000 4,700,000 Room Food Other Total department income Other Variable expense* Other fixed 500,000 2,000,000 costs ** Pretax income Income taxes Net income 2,200,000 600,000 1,600,000