Required: Prepare a budgeted Income statement for year 2. Sales revenue Lodging Incidentals Forfeited deposits Total...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Required: Prepare a budgeted Income statement for year 2. Sales revenue Lodging Incidentals Forfeited deposits Total revenues Costs Vernon Cabins Operating Income Year 2 Labor Incidentals Miscellaneous Utilities, etc. Depreciation Management Marketing Property taxes Total costs Operating profit Required information [The following information applies to the questions displayed below.] Vernon Cabins is a small motel chain located near state and national parks. Each property is made up of separate cabins. The chain has 10 properties with an average of 15 cabins at each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 80 percent, based on a 180-day season. The properties are closed from late fall until early spring. The average rate was $225 per night per cabin. The basic unit of operation is the "night," which is one cabin occupied for one night. The operating income for year 1 is as follows. Sales revenue Lodging Incidentals Forfeited deposits Total revenues Costs Vernon Cabins Operating Income Year 1 Labor Incidentals Miscellaneous Utilities, etc. Depreciation Management Marketing Property taxes Total costs Operating profit $ 4,860,000 475,200 129,600 $ 5,464,800 . $ 1,748,000 451,200 86,400 95,000 550,000 120,000 230,000 1,640,000 $ 4,928,600 $ 544,200 Other revenues consist of Incidentals (vending machine purchases, supplies, and so on) and forfelted deposits. In year 1, Incidentals revenue averaged $22 per night. Reservations require a deposit. Guests who fall to cancel before three nights prior to a stay forfelt the deposit. In year 1, forfelted deposits averaged $6 per night. In year 1, the average fixed labor cost was $110,000 per property. The remaining labor cost was variable with respect to the number of nights. The costs of Incidentals include $30,000 per season per property. The remaining cost of Incidentals is variable with respect to the number of nights. Miscellaneous costs are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and property taxes) are fixed for the firm. At the beginning of year 2. Vernon will close one of its properties with no change in the average number of rooms per property. The occupancy rate is expected to decrease to 70 percent. Management has made the following additional assumptions for year 2: The average room rate will increase by 10 percent. Incidental revenues per night are expected to increase by 5 percent. The forfelted deposit revenue per night is not expected to change. • The fixed labor cost is expected to increase by 12 percent per property. The variable labor cost per night is not expected to change. • Incidental cost factors are not expected to change. • The miscellaneous cost for a night is expected to increase by 25 percent. • Utilities costs per property are expected to increase by 20 percent. • Depreciation costs per property are forecast to remain unchanged. . Management costs will increase by 4 percent and marketing costs will decrease by 6 percent. Property taxes will decrease by $180,000 with the closing of the one property. Required: Prepare a budgeted Income statement for year 2. Sales revenue Lodging Incidentals Forfeited deposits Total revenues Costs Vernon Cabins Operating Income Year 2 Labor Incidentals Miscellaneous Utilities, etc. Depreciation Management Marketing Property taxes Total costs Operating profit Required information [The following information applies to the questions displayed below.] Vernon Cabins is a small motel chain located near state and national parks. Each property is made up of separate cabins. The chain has 10 properties with an average of 15 cabins at each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 80 percent, based on a 180-day season. The properties are closed from late fall until early spring. The average rate was $225 per night per cabin. The basic unit of operation is the "night," which is one cabin occupied for one night. The operating income for year 1 is as follows. Sales revenue Lodging Incidentals Forfeited deposits Total revenues Costs Vernon Cabins Operating Income Year 1 Labor Incidentals Miscellaneous Utilities, etc. Depreciation Management Marketing Property taxes Total costs Operating profit $ 4,860,000 475,200 129,600 $ 5,464,800 . $ 1,748,000 451,200 86,400 95,000 550,000 120,000 230,000 1,640,000 $ 4,928,600 $ 544,200 Other revenues consist of Incidentals (vending machine purchases, supplies, and so on) and forfelted deposits. In year 1, Incidentals revenue averaged $22 per night. Reservations require a deposit. Guests who fall to cancel before three nights prior to a stay forfelt the deposit. In year 1, forfelted deposits averaged $6 per night. In year 1, the average fixed labor cost was $110,000 per property. The remaining labor cost was variable with respect to the number of nights. The costs of Incidentals include $30,000 per season per property. The remaining cost of Incidentals is variable with respect to the number of nights. Miscellaneous costs are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and property taxes) are fixed for the firm. At the beginning of year 2. Vernon will close one of its properties with no change in the average number of rooms per property. The occupancy rate is expected to decrease to 70 percent. Management has made the following additional assumptions for year 2: The average room rate will increase by 10 percent. Incidental revenues per night are expected to increase by 5 percent. The forfelted deposit revenue per night is not expected to change. • The fixed labor cost is expected to increase by 12 percent per property. The variable labor cost per night is not expected to change. • Incidental cost factors are not expected to change. • The miscellaneous cost for a night is expected to increase by 25 percent. • Utilities costs per property are expected to increase by 20 percent. • Depreciation costs per property are forecast to remain unchanged. . Management costs will increase by 4 percent and marketing costs will decrease by 6 percent. Property taxes will decrease by $180,000 with the closing of the one property.
Expert Answer:
Answer rating: 100% (QA)
To prepare a budgeted income statement for year 2 and summarize the information provided we can use the given assumptions and calculations Heres the b... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 20 properties with an average of 150 rooms in each property. In year 1, the occupancy rate (the number of rooms...
-
HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 19 properties with an average of 200 rooms in each property. In year 1, the occupancy rate (the number of rooms...
-
Home Suites is a chain of all-suite, extended-stay hotel properties. The chain has 15 properties with an average of 200 rooms in each property. In year 1, the occupancy rate (the number of rooms...
-
Benny sells an apartment building. His adjusted basis for regular income tax purposes is $450,000, and it is $475,000 for AMT purposes. He receives $700,000 from the sale. a. Calculate Bennys gain...
-
Rocky Bayou Golf Clubs, which uses the FIFO method, has the following account balances at July 31, 2012, prior to releasing the financial statements for the year: Rocky Bayou has determined that the...
-
During the first eight months of the year, Ms. Layne was self-employed and earned $63,200 net income. In September, she accepted a job with MW Company and earned $75,000 salary through the end of the...
-
What are the functions of a kinship system?
-
On January 1, 2011, Victor Corporation sold a $1,400,000, 8 percent bond issue (6 percent market rate). The bonds were dated January 1, 2011, pay interest each June 30 and December 31, and mature in...
-
According to section 588G of Corporation Act 2001, when directors make a company incur a debt, and any reasonable director, in the same position, would have known the company would be insolvent if it...
-
The potential of solar panels on roofs built above national highways as a source of solar energy was investigated in the International Journal of Energy and Environmental Engineering (December,...
-
Ellay corp. is considering a new expansion project that consists ofsetting up a new manufacturing plant. The company bought a land 3 years ago for $2.1 million but did not use it. The company wants...
-
For a residential building project, the developer has estimated the capital investment, net rental revenue, and resale value after 6 years for the following three scenarios. Given the developer's...
-
A listing of the MFH's ledger accounts as of March 31 is given below: Assets Cash Accounts receivable ($130,000 February sales; $1,600,000 March sales) Stock Prepaid insurance Property and equipment...
-
A mass M is suspended by the system of ideal strings and pulleys shown. The system is static. The string tension is labelled at several positions, but there are only two pieces of string. The long...
-
12) The static friction force between the blocks, FSAB is; a) Mag b) , Mg c) 2,Mg 13) The constraint equations (relations among linear and angular velocities) are; a) VA = VB = Vc = Rwp b) VA = VB =...
-
Consider a damped oscillator with m = 0.2 kg, k = 100 N/m, and b = 5 N-s/m. The oscillator is driven by a force F= (1.6 N) cos 20r. (a) If the displacement is given by x = A cos(wt - 8), what are the...
-
Discuss the PMI Talent Triangle key competencies and skills required for a project manager to be successful, include a discussion on how the size and/or complexity of a project may change the project...
-
Nate prepares slides for his microscope. In 1 day he prepared 12 different slides. Which equation best represents y, the total number of slides Nate prepares in x days if he continues at this rate? A...
-
Plant House operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Plant House has $ 5.0 million in assets. Its yearly fixed costs are $ 600,000, and...
-
Layne Containers currently uses a recycled plastic to make bottles for the food industry. Current bottle production information: The cost and time standards per batch of 10,000 bottles are as...
-
Use the information from the Crystal Cruiseline Data Set. Draw a graph of Crystal Cruise-lines CVP relationships. Include the sales revenue line, the fixed expense line, and the to-tal expense line....
-
A wire segment of \(1.0 \mathrm{~m}\) and carrying a current of \(5.0 \mathrm{~A}\) is held in a plane in which it can rotate and translate with little friction. A long wire is fixed parallel to this...
-
If \(u\) is a velocity, \(x\) a length, and \(t\) a time, what are the dimensions (in the MLT system) of (a) \(\partial u / \partial t\), (b) \(\partial^{2} u / \partial x \partial t\), and (c)...
-
The Mach number is a dimensionless ratio of the velocity of an object in a fluid to the speed of sound in the fluid. For an airplane flying at velocity \(V\) in air at absolute temperature \(T\), the...
Study smarter with the SolutionInn App