January 2017. Previously, you estimated a cost function for the property and completed a CVP analysis. Your supervisor has asked you to prepare a 2018 operating budget. You can expect the available to be identical to 2017. Analysis of historical data suggests the following monthly room demand:

Months Monthly Demand

January and February 5% of annual demand.

March-May, September-October 8% of annual demand.

June-August 12% of annual demand.

November and December 7% of annual demand.

Revenues. In Sunrise (B), you forecast the average daily rate and sales volume for 2018. Assume the room rate is constant throughout the year.

Your regional manager provides you with the following insights:

• The front desk is staffed twenty-four hours per day. Average wages of front desk staff are $8.00/hour. Your annual salary, as general manager, is $27,000. (Please note the company assigns the general managers salary at a daily rate. That is over 365 days. Therefore use the first row to include the days in each month to include them in your cost formulas.)
• Housekeeping should clean a room in 20 minutes. However, preparing the laundry cart and taking linens to the laundry room mean that, on average, only two rooms per hour can be cleaned. The hourly wage rate for housekeepers is expected be $7.50. A laundry worker works 20 hours per week at $7.50/hour.
• Room Amenities. Rooms are stocked with two bars of soap and a bottle of shampoo. Soap costs $0.14 a bar and shampoo costs $0.25 per bottle. At the beginning of each month, you want 25% of next months requirements on hand. Beginning inventory requirements are met on 1/1. Assume January 2018 room sales will be 900 rentals. Expenses are calculated from a monthly purchases budget.

Other Supplies. Paint, light bulbs, coffee, etc. average about $1,000 per month.

Other Personnel: $5700 per month

Other expenses are $2400 per month

Repairs Jan-Feb, $875; Mar-May $1,400; Jun-Aug. $2100; Sep-Oct $1,400; Nov-Dec. $1,225.

Energy $4,700 per month

Utilities $1,350 per month

Required

1. Prepare a monthly operating budget for 2018.

2. Prepare a monthly purchases budget for room amenities (units and

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