Academia Resort anticipates the following changes in the business environment: 

• Management expects an increase in interest rates of 0.25% per quarter. 

• Fall in room patronage of 12%. 

• The guests will be willing to spend more per head if the staff up sells successfully - management expects a 20% increase in both food and beverage average sales. Room revenue is based on the following calculation: 

• Room rate is $120.00 per day. These rooms are all twins. 

• The Resort has 7,270 guests a year and all food and beverage revenue come from these guests. 

• Staff wages represent 25% of total revenue and management decided that in order to ensure good service this percentage must remain the same.

  

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After producing the new budget, you are required to calculate the variance, percentage change and also prepare another budget that allows for a profit of 28%. Food Beverage Accommodation Revenue Total Revenue Cost of Sales Food (25%) Beverage (30%) Accommodation (20%) Total COGS Gross Profit Operating Expenses Wages Operating supplies Administration Advertising Maintenance Utilities Depreciation Interest Total Operating Costs Net profit before tax 2021 2022 - Current Budget 223,000 71,000 437,000 731,000 $ 53,750 22,950 88,300 165,000 566,000 $ 179,500 36,500 19,000 34,000 22,000 31,100 10,200 18,500 350,800 215,200 Profit 2022 2023 Variance % Change Increase to 28% With cost increases $ $ 28% Increase in profit $ After producing the new budget, you are required to calculate the variance, percentage change and also prepare another budget that allows for a profit of 28%. Food Beverage Accommodation Revenue Total Revenue Cost of Sales Food (25%) Beverage (30%) Accommodation (20%) Total COGS Gross Profit Operating Expenses Wages Operating supplies Administration Advertising Maintenance Utilities Depreciation Interest Total Operating Costs Net profit before tax 2021 2022 - Current Budget 223,000 71,000 437,000 731,000 $ 53,750 22,950 88,300 165,000 566,000 $ 179,500 36,500 19,000 34,000 22,000 31,100 10,200 18,500 350,800 215,200 Profit 2022 2023 Variance % Change Increase to 28% With cost increases $ $ 28% Increase in profit $

Answer rating: 100% (QA)

To calculate the variance and percentage change for each revenue and expense category we use the for... View the full answer