CVP Hotel Rooms - profit to $300,000. Is this attainable if...

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2.   Utilize cost-volume-profit analysis to determine how many rooms you would need to sell to  reach the budgeted revenue goal of $150 per room. Fixed costs for the hotel are $470,000 per  room, and the labor cost to maintain each room is $40. Number of Rooms Needed = Fixed Costs ÷ (Revenue Per Room – Labor Per Room) Number of Rooms Needed = $470,000 ÷ ($150 - $40) Number of Rooms Needed = $470,000 ÷ $110 Number of Rooms Needed   4,272 Rooms   3.   Now pretend you are Ms. Samuelson and the owner requests that you increase net operating 
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Unformatted text preview: profit to $300,000. Is this attainable if the Crescendo Hotel only has 125 rooms? ( Hint: Use the desired volume calculation.) Desired Volume = (Target Profit + Fixed Costs) (Revenue Per Room Labor Per Room) Desired Volume = ($300,000 + $470,000) ($150 - $40) Desired Volume = $770,000 $110 Desired Volume = 7000 Rooms Increasing the operating profit by $300,000 is only attainable with 125 rooms, if each room is occupied at least 56 (7,000 125) separate times during the course of the year...
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This note was uploaded on 03/14/2012 for the course ACCOUTNING 550 taught by Professor Abner during the Spring '11 term at DeVry Houston.

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