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Skyview Manor Solution

manor

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bhaihello015
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31 views5 pages

Skyview Manor Solution

manor

Uploaded by

bhaihello015
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Question 1

Identify Variable Cost

Cleaning Supplies 1920


Linen Service 13920
1/2 Misc Expenses 3657
Total Variable Cost 19497
VC per Room Night
Total Rooms 80
Operating Days 120
Total Room Nights (Capacity Available) 9600
Occupancy Rate 80%
Occupied Room Nights (Used Capacity) 7680

Per Occupied Room Night 2.54

Contribution Margin
Revenue/unit 20.94
CM= Rev - Per Unit Var Cost 18.40

Fixed Cost Fixed Cost 118913

Break Even Point 6463


Per Night (/120) 54

Question 2
When we lose room nights, we are only losing the CM from those room nights, not the revenue
as such

Lost CM due to Lost Room Nights Rooms Lost on Weekend Days 8


Weekend Days 34
CM per Room Night 18.40
Lost CM, due to room nights lost 5005

Added CM due to raised prices


Rooms occupied 72
Weekend Days 34
Added Price (Increase in SP, implying increase
in CM since CM = Avg Rev - SP) 5
Added CM due to Price (SP) increase 12240

Profit Before Taxes


Difference in CM after the Price Increase 7235
New Breakeven Point (The least number of rooms to be occupied)
Breakeven Lost Rooms X
CM Per Room night 18.4

X*18.40 = (80-X)*5
18.4X=400-5X
18.4X+5X = 400
23.4X = 400
X = 400/23.4 = 17

New Breakeven rooms 17


New least occupancy for breakeven 63

The price increase holds good if there are atleast 63 rooms occupied per ni

Question 3
Additional Expense for just staying open in off
season 15415

Revenue
Single Occupancy 10
Double Occupancy 15
Weighted Average 14
Variable Cost Variable Cost per Room (Calculatrted in Q1) 2.54

Contribution Margin CM (Rev - VC per room) 11.46

BE Occupancy Rate Breakeven Room nights Occupancy 1345

Rooms available 30
Operating Days 240
Total Room nights available 7200

Breakeven Occupancy rate 18.7%

Extra profits that will be yielded Predicted Occupancy rate is 20% - 40%

Lowest Predicted Occupancy rate is 20% 1440


Calculated Breakeven Occupancy 1345
Room Difference 95

So 95 rooms extra are being occupied even at


lowest prediction, yielding an extra profit of 1087
Question 4
Alternatives to consider
1 Do Nothing
2 Open - No adv - No Pool
3 Open - Adv- No Pool
4 Open - No Adv - Pool only
5 Open - Adv - Pool only
6 Open - No Adv - Pool & Bubble
7 Open - Adv - Pool & Bubble

DECISION ALTERNATIVE
67.3%
63 rooms occupied per night

Rooms that ve to be occupied to cover the additional costs

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