CVP Hotel Rooms

# 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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