homework 3 - Problem 1 1 Intercept Rooms Sold Coefficients...

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Coefficients Intercept 34036.24033 Rooms Sold 8.808205022 Coefficients Intercept 47967.12459 Rooms Sold 7.823384497 Coefficients Intercept 94003.36492 Rooms Sold 16.63158952 Problem 1 1) Rooms expense = 34,036.24 + 8.81(# of Rooms) Undistributed operating expense = 47,967.12 + 7.82(# of Rooms) Rooms and UO expenses are both mixed. 2) Costs above are both mixed. By intuition, I thought that rooms expense would be more proportionately variable. Because undistributed expenses contains fixed costs, like salaries, and variable costs, like marketing, I am not surprised that the regression reveals that it is mixed. 3) Total operating costs = 94,003.36 + 16.63(# of Rooms) 4) , . ( - . ) 94 003 36 83 16 63 = 1,417 (rounded up to nearest whole number) , , 1 4174 092 = 34.63%
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$30,000 $80,000 $130,000 $180,000 $230,000 $280,000 $330,000 $380,000 0 500 1000 1500 2000 2500 3000 3500 4000 CVP Total Cost Revenue -$100,000 -$50,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 0 500 1000 1500 2000 2500 3000 3500 4000 Profit Volume 5) *Note that on the CVP graph that the breakeven point is greater than 1,417, this is because we previously estimated BEP with an ADR of $83. 6) 7) Sales 8) $249,0 00 9) Total Variable Cost 10) 49,490
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$60 $65 $70 $75 $80 $85 $90 $95 $100 $105 $110 1500 2000 2500 3000 3500 4000 ADR vs Rooms Sold 11) Contribution Margin 12) 199,51 0 13) Total Fixed Costs 14) 94,003.
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