The DimAl Hostel is in the centre of Almaty close to major bus connections. DimAl has 40 double bedrooms and it charges guests $89 per room per night, regardless of single or double occupancy. The hostel has a 80% budgeted occupancy rate. Fixed costs are budgeted at $ 400,000 a year and are distributed evenly during the year, variable cost is $40 per occupied room per night. Hotel is open for 365 days a year.

During the first 3 months (Q1) of the year the occupancy rates are below the levels expected at other times of the year. DimAl expecting to sell 800 occupied room nights during Q1.

To improve profitability two options are being considered. First is to close the hostel for the duration of Q1. Second, assess if any of below projects can be implemented:

Project 1 Shymbulak day pass

To boost profit DimAl would offer guests a day pass to Shymbulak. The offer will be valid for Q1 only and offered to guests who pay for 3 nights at a special rate of $65 per room night. Guests will receive a day pass for payment of $60 (price for 2 persons). The pass costs $50 to DimAl. Project fixed costs are estimated at $10,000.

Project 2 Gym

There is spare capacity to extend the Hostel and build a gym for the benefit of DimAl guests. The information of the new project is illustrated below. The graph does not include the effect of Project 1 offer.

Required:

1. Based on current annual budgeted figures, calculate the breakeven number of occupied room nights and the margin of safety (in %). You should ignore Project 1 and Project 2 information. (2 marks)
2. Estimate the budgeted profit or loss for Q1 and explain whether the hostel should close in Q1. You should ignore Project 1 and Project 2 information. (2 marks)
3. Calculate the breakeven point in sales value of Project 1 and state if the project is viable and should go live. (2 marks)
4. Using the graph, quantify and comment upon the financial effect of Project 2. (3 marks)

... 63 12:55 0.7 Kb/c O 2_53662000...516545.pdf - TOJKO qayteHVA ky Section B (18 marks in total) ILO(S) 1-4 1. (9 marks in total) The DimAl Hostel is in the centre of Almaty close to major bus connections. DimAl has 40 double bedrooms and it charges guests $89 per room per night, regardiess of single or double occupancy. The hostel has a 80% budgeted occupancy rate. Fixed costs are budgeted at $ 400,000 a year and are distributed evenly during the year, variable cost is $40 per occupied room per night. Hotel is open for 365 days a year. During the first 3 months (01) of the year the occupancy rates are below the levels expected at other times of the year. DimAl expecting to sell 800 occupied room nights during Q1. To improve profitability two options are being considered. First is to close the hostel for the duration of Q1. Second, assess if any of below projects can be implemented: Project 1 - Shymbulak day pass To boost profit Dim Al would offer guests a day pass to Shymbulak. The offer will be valid for Q1 only and offered to guests who pay for 3 nights at a special rate of $65 per room night. Guests will receive a day pass for payment of $60 (price for 2 persons). The pass costs $50 to DimAl. Project fixed costs are estimated at $10,000 Project 2 - Gym There is spare capacity to extend the Hostel and build a gym for the benefit of DimAl guests. The information of the new project is illustrated below. The graph does not include the effect of Project 1 offer Breakeven chart for Project 2: hostel gym 3,000 Sales 2,230 Total 2000 1,000 900 Fixed cost Margin of safety 2011 10.000 3,761 4.035 Number of rooms cocupled Required: (1) Based on current annual budgeted figures, calculate the breakeven number of occupied room nights and the margin of safety (in %). You should ignore Project 1 and Project 2 information. (2 marks) (W) Estimate the budgeted profit or loss for Q1 and explain whether the hostel should close in Q1. You should ignore Project 1 and Project 2 information. (2 marks) (II) Calculate the breakeven point in sales value of Project 1 and state if the project is viable and should go live. (2 marks) (i) Using the graph, quantify and comment upon the financial effect of Project 2. (3 marks) ... 63 12:55 0.7 Kb/c O 2_53662000...516545.pdf - TOJKO qayteHVA ky Section B (18 marks in total) ILO(S) 1-4 1. (9 marks in total) The DimAl Hostel is in the centre of Almaty close to major bus connections. DimAl has 40 double bedrooms and it charges guests $89 per room per night, regardiess of single or double occupancy. The hostel has a 80% budgeted occupancy rate. Fixed costs are budgeted at $ 400,000 a year and are distributed evenly during the year, variable cost is $40 per occupied room per night. Hotel is open for 365 days a year. During the first 3 months (01) of the year the occupancy rates are below the levels expected at other times of the year. DimAl expecting to sell 800 occupied room nights during Q1. To improve profitability two options are being considered. First is to close the hostel for the duration of Q1. Second, assess if any of below projects can be implemented: Project 1 - Shymbulak day pass To boost profit Dim Al would offer guests a day pass to Shymbulak. The offer will be valid for Q1 only and offered to guests who pay for 3 nights at a special rate of $65 per room night. Guests will receive a day pass for payment of $60 (price for 2 persons). The pass costs $50 to DimAl. Project fixed costs are estimated at $10,000 Project 2 - Gym There is spare capacity to extend the Hostel and build a gym for the benefit of DimAl guests. The information of the new project is illustrated below. The graph does not include the effect of Project 1 offer Breakeven chart for Project 2: hostel gym 3,000 Sales 2,230 Total 2000 1,000 900 Fixed cost Margin of safety 2011 10.000 3,761 4.035 Number of rooms cocupled Required: (1) Based on current annual budgeted figures, calculate the breakeven number of occupied room nights and the margin of safety (in %). You should ignore Project 1 and Project 2 information. (2 marks) (W) Estimate the budgeted profit or loss for Q1 and explain whether the hostel should close in Q1. You should ignore Project 1 and Project 2 information. (2 marks) (II) Calculate the breakeven point in sales value of Project 1 and state if the project is viable and should go live. (2 marks) (i) Using the graph, quantify and comment upon the financial effect of Project 2