HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 15 properties with an average of 210 rooms in each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 80 %, based on a 365-day year. The average room rate was $190 for a night. The basic unit of operation is the "night", which is one room occupied for one night. The operating income for year 1 is as follows: HOMESUITES Operating Income Year 1 Sales Revenue Lodging Food & beverage Miscellaneous Total revenues Costs Labor Food & Beverage Miscellaneous Management Utilities, etc. Depreciation Marketing Other costs Total costs Operating profit $ 58,192.000 In year 1, the average fixed labor cost was $405,000 per property. The remaining labor cost was variable with respect to the number of nights. Food and beverage cost and miscellaneous cost are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing and other costs) are fixed for the firm. . At the beginning of year 2, HomeSuites will open five new properties with no change in the average number of rooms per property. The occupancy rate is expected to remain at 80% Management has made the following additional assumptions for year 2: . . $174,762,000 29,433,600 10,117,800 214,313,400 . $ 61,263,000 18,396,000 11,957,400 2,505,000 36,000,000 13,500,000 10,000,000 2,500,000 156,121,400 . The average room rate will increase by 10% Food and beverage revenues per night are expected to decline by 25% with no change in cost. The labor cost (both the fixed per property and variable portion) is not expected to change. The miscellaneous cost for the room is expected to increase by 30%, with no change in the miscellaneous revenues per room. Utilities and depreciation costs (per property) are forecast to remain unchanged. Management costs will increase by 5%, and marketing costs will increase by 5%. Other costs are not expected to change Using your analysis to prepare the budgeted income statement for year 2, prepare two additional income statements (also in Excel) under the following two scenarios: 1) Strategy 1: "High Price"-management will work to maintain an average price of $220 per night. They realize that this will reduce demand and estimate that the occupancy rate will fall to 70% with this strategy. 2) Strategy 2: "High Occupancy" -management will work to increase the occupancy rate by lowering the average price. They estimate that with an average nightly rate of $180, they can achieve an occupancy rate of 90%. All other estimates for year 2 remain the same as before. Required-3: Once you have completed your 3 budget scenarios, make a recommendation to management (original plans, high price, high occupancy..... what makes the most sense and why).