“Sun & Beach” Hotels is a 2-hotel-branch company (formed by Sun and Beach) at the Valencian coast. As a consequence of analyzing their cost behavior, it’s been determined that variable costs are represented by the percentages shown in the table below:

Variable cost structure	SUN HOTEL	BEACH HOTEL
Food, consumable items	10%	10%
Staff/Payroll	20%	30%
Other manufacturing costs	12%	15%

During the last accounting year, total revenues for the whole company were €730,000, 30% of which belongs to Hotel Sun. We know that regarding the Total fixed costs total amount is € 225,000.

Required:

1. Prepare the income statement report.

2. Compute the break-even-point, in revenues, for the whole company and per each hotel.

3. Which are the total revenues needed that make Operating Income equal to €180,000 if costs structure remains equal.

4. Assuming there’s a 5% increase for payroll variable costs in both hotels for the next period and fixed costs are finally expected to become € 250,000. The sales mix doesn’t change. Calculate the total revenues needed to earn a target operating income of 20% of revenues.

5. Regarding the initial situation and the information provided on fixed costs, what is the amount of sales that every hotel should have reached individually to cover their traceable own fixed costs? (Critical Point). Prepare the segmented income statement report.

Fixed costs structure	SUN HOTEL	BEACH HOTEL	TOTAL
Traceable Direct Fixed Costs 90,000 75,000 Common Fixed Costs			165,000 60,000
		TOTAL	225,000

Answer rating: 100% (QA)

1 Income statement report Revenues Hotel Sun 219000 Hotel Beach 511000 Total 730000 Variable Costs H... View the full answer