2)If Jason desires his property to generate a pretax profit of $100,000, how many roomsmust be sold, on yearly basis? 3)What is the hotel’s occupancy rateto reach the pretax profit in 2)? Problem 7:The Mason Suite Hotel is a rooms-only 50-room lodging operation, has a cost structure asfollows:-monthly fixed costs: $20,000-variable costs per room sold: $20-average room rate: $60-income tax rate: 20%Required:1)Compute CMR 2)What is the breakeven point in units? 3)If the hotel is to make $10,000 of monthly net profit (after tax), what must its totalrevenue be? Page 6 of 9
4)If the hotel’s variable costs increased by 50%, how much must its average room rateincrease, assume CM stays the same? Problem 8:The Mackinaw and Minier Hotels’ summarized operating results are as follows:Mackinaw HotelMinier HotelCMRw60%50%Annual fixed costs$1,200,000$1,000,000Tax rate20%20%Required:1)Compute each hotel’s breakeven point. 2)Which hotel is riskier? Explain. Problem 9:Palace du Rhone, a lakeside 4-star property, has Rooms and F&B departments. The Roomsdepartment provides 65% of the hotel’s total revenue with variable costs of 25%; the rest ofthe total hotel’s revenue is provided by F&B department (35%)with variable costs of 60%.The property’s annual fixed costs total $300,000Required:(keep two decimals on all calculations)1)What is each department’s contribution margin ratio? . Page 7 of 9
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- Spring '20
- Contribution Margin