Explain your reccomendation to the owners based on the calculations. The owners of the Kempenfelt Bay...

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Explain your reccomendation to the owners based on the calculations. The owners of the Kempenfelt Bay Resort are contemplating closing the resort in the 4th quarter i a three-month vacation. The owner has asked for your advice and after an analysis of the 4th quar Wages & Salaries Expense: $3,500 is a fixed cost of key personnel who would be kept on the payro three months. Supplies expense: Costs varies directly with sales revenue; none of the suplies cost is fixed. Advertising Expense: $300 of Advertising cost is fixed; the rest of the cost is variable. Utilities Expense: Even if closed for three months, the resort will still require some heating; this is Maintenance Expense: Some light maintenance is required during the closed period with an estim Insurance expense: Insurance cost will be reduced 50% if closed for the three months. Depreciation expense: With less customer traffic and reduced wear and tear, there would be a 75 for the fourth quarter. Interest Expense: Will still have to pay, even if it's closed for 3 months. Rent Expense: This is an annual expense of $20,000 that MUST be paid, regardless of whether the Sales revenue Cost of Sales Gross Margin Operating Expenses: Payroll Expense Supplies Expense Advertising Expense Utilities Expense Maintenance Insurance expense Interest Expense Depreciation Rent Expense Total Op. Expenses I.B.I.T 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $89,400 $40,000 $97,000 35,900 33,100 20,100 $61,100 $56,300 $19,900 $86,400 32,800 $53,600 32,000 1,900 900 2,600 450 1,200 750 700 5,000 $45,500 $8,100 35,900 2,200 900 2,900 450 1,200 750 750 700 700 5,000 5,000 $50,000 $46,700 33,100 1,970 900 2,680 400 1,200 $11,100 $9,600 17,800 1,100 600 2,400 400 1,200 750 700 5,000 $29,950 -$10,050 Totals $312,800 121,900 $190,900 118,800 7,170 3,300 10,580 1,700 4,800 3,000 2,800 20,000 $172,150 $18,750 If business will stay open on 4th quarter, then they will not be profitable during whole year. Explain your reccomendation to the owners based on the calculations. The owners of the Kempenfelt Bay Resort are contemplating closing the resort in the 4th quarter i a three-month vacation. The owner has asked for your advice and after an analysis of the 4th quar Wages & Salaries Expense: $3,500 is a fixed cost of key personnel who would be kept on the payro three months. Supplies expense: Costs varies directly with sales revenue; none of the suplies cost is fixed. Advertising Expense: $300 of Advertising cost is fixed; the rest of the cost is variable. Utilities Expense: Even if closed for three months, the resort will still require some heating; this is Maintenance Expense: Some light maintenance is required during the closed period with an estim Insurance expense: Insurance cost will be reduced 50% if closed for the three months. Depreciation expense: With less customer traffic and reduced wear and tear, there would be a 75 for the fourth quarter. Interest Expense: Will still have to pay, even if it's closed for 3 months. Rent Expense: This is an annual expense of $20,000 that MUST be paid, regardless of whether the Sales revenue Cost of Sales Gross Margin Operating Expenses: Payroll Expense Supplies Expense Advertising Expense Utilities Expense Maintenance Insurance expense Interest Expense Depreciation Rent Expense Total Op. Expenses I.B.I.T 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $89,400 $40,000 $97,000 35,900 33,100 20,100 $61,100 $56,300 $19,900 $86,400 32,800 $53,600 32,000 1,900 900 2,600 450 1,200 750 700 5,000 $45,500 $8,100 35,900 2,200 900 2,900 450 1,200 750 750 700 700 5,000 5,000 $50,000 $46,700 33,100 1,970 900 2,680 400 1,200 $11,100 $9,600 17,800 1,100 600 2,400 400 1,200 750 700 5,000 $29,950 -$10,050 Totals $312,800 121,900 $190,900 118,800 7,170 3,300 10,580 1,700 4,800 3,000 2,800 20,000 $172,150 $18,750 If business will stay open on 4th quarter, then they will not be profitable during whole year.

Answer rating: 100% (QA)

According to the data and figures given it appears that keeping the Kempenfelt Bay Resort operational until the fourth quarter would not be profitable ... View the full answer