Skyview writeup

Skyview writeup - Skyview Manor Glossary Assets A resource...

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Skyview Manor Glossary Assets A resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Break even analysis Relates to the calculation of the necessary levels of activity required in order to break even in a given period. Break even occurs when total revenue and total expenses are equal. Contribution margin Sales (selling price per unit) less variable costs (variable cost per unit). Costs A resource, usually measured in monetary terms, used to achieve a particular organisational objective. Expenses The consumption or losses of future economic benefit in the form of reductions in assets or increases in liability of the entity, other than those relating to distributions to owners; the costs of assets consumed or services used in the process of generating revenues. Fixed costs Those costs that remain the same in total (within a given range of activity and timeframe) irrespective of the level of activity. Income Revenue arising in the ordinary course of activities plus gains from sales and other increases in owner’s equity. Incremental contribution margin The difference between the incremental revenues and the incremental variable costs. Incremental costs The changes in cost which arise from a proposed action which are relevant to that action. Page 1
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Skyview Manor Incremental revenue The changes in revenue which arise from a proposed action which are relevant to that action. Loss A situation where expenses exceed revenues for an accounting period. Profit The excess of income over expenses for a period. Profitability Refers to an entity’s performance (profit) during the reporting period or over a number of reporting periods measured in relative terms. Revenue A subset of income arising in the ordinary course of an entity’s activities. Variable costs Those costs that change in total as the level of activity changes. Weighted average contribution margin The sum of the contribution margin of each product weighted by the relative sales mix. Page 2
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gure Changed Rates Profit Comparison e Skyview Manor Introduction Mr. Snowman, the owner of Skyview Manor, has been approached by Mr. Kacheck with a number of proposals to increase the profitability of the ski resort. The resort is an old but well maintained property which has had several owners in its time. It is positioned as a good quality, mid priced “destination” resort hotel. There is no restaurant or bar in the hotel, and its greatest asset is its spectacular views of the skiing slopes, mountains and the village which can only be seen from one of the wings. The hotel has two separate wings, east and west, which contain 50 and 30 rooms respectively, with the west costing $5 more per room because of its views. Currently, the resort is only open during the ski season which runs for 120 days and is closed for the remainder of the year. Mr. Kacheck is concerned about the off-season months, which show losses each month and
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This note was uploaded on 10/23/2009 for the course HES 2340 taught by Professor Tomedwards during the Three '09 term at Swinburne.

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Skyview writeup - Skyview Manor Glossary Assets A resource...

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