The first step in preparing a pro forma budget for year 2 from the Year 1 income statement is to analyze the Year 1 income statement. Occupancy days are key to every calculation that involves variable factors. 1. In year 1 there are 10 properties with 15 cabins with 80 percent occupancy for 180 days (10 * 15 * .8 * 180) = Yr 1 Occupancy Days You can verify this equation by multiplying the number of occupancy days * $225 to confirm that it gives you the Year 1 lodging revenue on the income statement. To calculate year 2 projected revenue and and costs, adjust the equation above to get the estimated occupancy days for Year 2 based on the change in number of properties and forecast occupancy rate. 2. To get revenues per occupancy day divide the revenue on the yr 1 statement by the number of occupancy days. You will use that to calculate Yr 2 revenues in each category based on the assumptions for yr 2 in the problem. 3. Labor cost is a mixed cost as noted in the problem. The first step is to prove the year 1 labor cost and calculate the variable