Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The owner of a local motel asked you to help him set up his budget with the following information. Its monthly Fixed Cost amount

 

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) (i) Fixed Cost: (d)- EBT: le) (k) x (30%) XXXXXX Net Income: Provide your answer to the vertical analysis % of (I: Net Income %). Round your answer to the first decimal of the percentage (as in ##.#%). (Do not put "%" or "" in your answer. Just put the number. If you answer is 10.1%; then put 10.1. If your answer is negative, put "-" as in -10.1 for -10.1%. If you put in 0.9 the system will accept it as 0.9%)

Step by Step Solution

3.44 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

Slow Month 6000 rooms to sell lowered ADR of ... 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

Managerial Economics and Business Strategy

Authors: Michael R. baye

7th Edition

978-0073375960, 71267441, 73375969, 978-0071267441

More Books

Students also viewed these Accounting questions