Lux Hotel 5-Star Hotel Configuration 1 staff cost are estimated to be 18% of accommodation revenue 2
Question:
Lux Hotel 5-Star Hotel Configuration
1 staff cost are estimated to be 18% of accommodation revenue
2 purchases are estimated to be 15% of accommodation revenue
3 marketing costs are estimated to be 5% of accommodation revenue
4 Administration costs of $200,000 are allocated based on floor space
5 utilities cost has an allocation of $30 per square metre floor space plus 3% of accommodation revenue
6 maintenance cost has an allocation of $50 per square metre floor space plus 9% of accommodation revenue
7 Other operating expenses of $300,000 are allocated based on floor space
Required:
(a) Reconstruct the income statement using the contribution margin format, clearly show separate columns for each room type and maintaining a total column.
(b) Calculate sales mix (based on accommodation revenue) for Lux Hotel.
(c) Calculate the weighted average contribution margin (WACM) per night stay of each room type and total WACM.
(d) Determine the overall break-even level of rooms and number of night stay of each room type.
(e) Calculate the margin of safety per room type. (6 marks) (f) Suppose that Lux Hotel desires to earn a $500,000 profit. Determine the occupancy rates required to earn the desired profit.
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe