Use the following information to prepare the Operating Budget, to include the full calculation of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Use the following information to prepare the Operating Budget, to include the full calculation of the rooms revenue using the double differential formula and expenses forecast. Once you have completed the Operating Budget, you will be able to prepare a Cash Flow Budget The Towne Motel has 10 rooms and it open year round. However, the motel is closed for 15 days of vacation between seasons. It has no food or beverage facilities. We'll assume you would like to achieve a net after-tax income of approximately $30,000 for the year, which is a 10% return on equity of $300,000 The division of your budget into planning periods are best defined as May 1 - October 31 and November 1 - April 30 since the Towne Motel is located in a summer tourist area. The factors and trends expected to affect your business. The Towne Motel has been in business for 10 years and you have The factors and trends expected to affect your business. The Towne Motel has been in business for 10 years and you have developed a solid relationship with your repeat guests. You do not anticipate any major changes in demand by this market. However, a local motor-inn of comparable facilities has just gone out of business. As a result, you feel your annual occupancy should increase by 5%. Some rooms will require small renovations, $17000 will be spent in June and $13000 will be spent in December Your marketing budget is $1650 for May-Oct. and $1850 for winter season Administrative and general expenses are estimated at $ 2700 for May- Oct. and $2650 for Nov - April Estimate Telephone revenues at $2.50 per occupied room night and Other income at 1% of total reveunes. The owners withdrew $2500 each period as drawings from the business and managed to repay $350 monthly in debt to the local bank Number of Days in Period: May to October = 175 Number of Days in Period: November to April = 175 Occupied Room Nights May October - November - April Double Occupancy factor May October - November -April Occupied Projected Rm Nights Occupancy % Last Year Occupied Occupanc Rm Nights y % 2.0 2.0 1.3 1.3 225 70% 63% Room Rates Single Double Room Revenues May - October November - April Total Show your calculations $ 120.00 $ 118.00 $ 124.00 $ 122.00 $ $ LA 8 points 3 points May - October November - April Total $ Show your calculations *Assume equal days in each period. So 175 days period Number of Days in Period: May to October = 175 Number of Days in Period: November to April = 175 [365 days in a year - 15 days closed for the year = 350) $ +A 8 points 3 points Assumptions made to prepare Expenses Forecasts Variable expenses are estimated based on projected volumes Complete the calculations of the assumptions provided Salaries,Wages and Employee Benefits 1 maid @ $28,000 Annually 1 grounds keeper (Summer ONLY) @ $10,000 Owner's Salary is $34,000 annually Employee Benefits @ 8% of Salary & Wages Other Expenses Room Expenses Other room expenses are 6% of room sales at the Towne Motel Telephone Expense Estimated at 83% of telephone revenues Energy Cost Energy cost were $9,500 last year. Due to a slight increase in occupancy and an anticipated increase of 8% the estimate for next year is $10,600. 35% summer and 65% winter May - Oct Nov - Apr Property Operation and Maintenance If possible, you should cost any planned renovations; in addition. A base amount should be included Renovation assumptions of $17,000 in the first period and $13,000 in the second period Marketing budget Administrative and General Expenses (estimated) Financial and Other Expenses Interest expenses are obtained from Mortgage Co. Towne Motel interest charges are $11,500 for year Local Insurance estimates premium $2,750/year (CCA & asset values) Annual depreciation is projected at $,9000 Municipal Taxes Estimate based on local municipal tax dept. $3,500 annually The projected income tax that will be applied is 28% Last years closing cash balance was $5000 14 points Period Ending April 30 * PROJECTED BUDGET numbers. No actuals * Round up. No decimals. May - October November - April Budget Actual Budget Actual Revenues Guest Rooms Telephone Other Income Total Operating Expenses Salaries & Wages Employee Benefits Direct Operating Expenses Administration & General Marketing Property Operation & Maintenance Energy Costs Total Operating Expenses Income Before Fixed Charges * * Budget numbers only No decimals. Round up. Cash, Opening Balance Cash Receipts Revenues Proceeds from any Loans Cash contributions from Owner Total Cash Receipts Cash Disbursements Total Operating Expenses Total Fixed Expenses Cash Drawings by Owners Repayment of any debt Total Cash Disbursements Net Cash Flow Cash Closing Balance Towne Motel Cash Flow Budget May - October November - April Annual Budget Actual Budget Actual Budget $ 5,000 30 points Use the following information to prepare the Operating Budget, to include the full calculation of the rooms revenue using the double differential formula and expenses forecast. Once you have completed the Operating Budget, you will be able to prepare a Cash Flow Budget The Towne Motel has 10 rooms and it open year round. However, the motel is closed for 15 days of vacation between seasons. It has no food or beverage facilities. We'll assume you would like to achieve a net after-tax income of approximately $30,000 for the year, which is a 10% return on equity of $300,000 The division of your budget into planning periods are best defined as May 1 - October 31 and November 1 - April 30 since the Towne Motel is located in a summer tourist area. The factors and trends expected to affect your business. The Towne Motel has been in business for 10 years and you have The factors and trends expected to affect your business. The Towne Motel has been in business for 10 years and you have developed a solid relationship with your repeat guests. You do not anticipate any major changes in demand by this market. However, a local motor-inn of comparable facilities has just gone out of business. As a result, you feel your annual occupancy should increase by 5%. Some rooms will require small renovations, $17000 will be spent in June and $13000 will be spent in December Your marketing budget is $1650 for May-Oct. and $1850 for winter season Administrative and general expenses are estimated at $ 2700 for May- Oct. and $2650 for Nov - April Estimate Telephone revenues at $2.50 per occupied room night and Other income at 1% of total reveunes. The owners withdrew $2500 each period as drawings from the business and managed to repay $350 monthly in debt to the local bank Number of Days in Period: May to October = 175 Number of Days in Period: November to April = 175 Occupied Room Nights May October - November - April Double Occupancy factor May October - November -April Occupied Projected Rm Nights Occupancy % Last Year Occupied Occupanc Rm Nights y % 2.0 2.0 1.3 1.3 225 70% 63% Room Rates Single Double Room Revenues May - October November - April Total Show your calculations $ 120.00 $ 118.00 $ 124.00 $ 122.00 $ $ LA 8 points 3 points May - October November - April Total $ Show your calculations *Assume equal days in each period. So 175 days period Number of Days in Period: May to October = 175 Number of Days in Period: November to April = 175 [365 days in a year - 15 days closed for the year = 350) $ +A 8 points 3 points Assumptions made to prepare Expenses Forecasts Variable expenses are estimated based on projected volumes Complete the calculations of the assumptions provided Salaries,Wages and Employee Benefits 1 maid @ $28,000 Annually 1 grounds keeper (Summer ONLY) @ $10,000 Owner's Salary is $34,000 annually Employee Benefits @ 8% of Salary & Wages Other Expenses Room Expenses Other room expenses are 6% of room sales at the Towne Motel Telephone Expense Estimated at 83% of telephone revenues Energy Cost Energy cost were $9,500 last year. Due to a slight increase in occupancy and an anticipated increase of 8% the estimate for next year is $10,600. 35% summer and 65% winter May - Oct Nov - Apr Property Operation and Maintenance If possible, you should cost any planned renovations; in addition. A base amount should be included Renovation assumptions of $17,000 in the first period and $13,000 in the second period Marketing budget Administrative and General Expenses (estimated) Financial and Other Expenses Interest expenses are obtained from Mortgage Co. Towne Motel interest charges are $11,500 for year Local Insurance estimates premium $2,750/year (CCA & asset values) Annual depreciation is projected at $,9000 Municipal Taxes Estimate based on local municipal tax dept. $3,500 annually The projected income tax that will be applied is 28% Last years closing cash balance was $5000 14 points Period Ending April 30 * PROJECTED BUDGET numbers. No actuals * Round up. No decimals. May - October November - April Budget Actual Budget Actual Revenues Guest Rooms Telephone Other Income Total Operating Expenses Salaries & Wages Employee Benefits Direct Operating Expenses Administration & General Marketing Property Operation & Maintenance Energy Costs Total Operating Expenses Income Before Fixed Charges * * Budget numbers only No decimals. Round up. Cash, Opening Balance Cash Receipts Revenues Proceeds from any Loans Cash contributions from Owner Total Cash Receipts Cash Disbursements Total Operating Expenses Total Fixed Expenses Cash Drawings by Owners Repayment of any debt Total Cash Disbursements Net Cash Flow Cash Closing Balance Towne Motel Cash Flow Budget May - October November - April Annual Budget Actual Budget Actual Budget $ 5,000 30 points
Expert Answer:
Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
Posted Date:
Students also viewed these accounting questions
-
What mass of Cu metal is required to react with 6.8 drops of 16M HNO3? Assume 20 drops = 1 mL. Cu (MM 63.54 g/mol), (16M = 16 mol/L) Cu(s) + 4HNO3(aq) Cu(NO3)2(aq) + 2NO2(g) + 2H2O(1) Hint: x drops...
-
The time of oscillation t of a pendulum is given by t=2.pai(l/g)^1/2 Determine the approximate percentage error in t when I has an error of 0.2% too large and g 0.1% too small.
-
Imagine that a researcher develops a new cancer drug that shrinks tumors, which she measures using an MRI. The researcher needs to determine if the new drug performs differently from, or the same as,...
-
What recommendations would you make to Big Four firms to help them (1) avoid confrontations with governmental officials in an authoritarian society and (2) deal effectively with such confrontations...
-
Air America has a policy of routinely overbooking flights. The random variable x represents the number of passengers who cannot be boarded because there are more passengers than seats (based on data...
-
Refer to the information in Exercise 16-12. Prepare a process cost summary using the FIFO method. (Round cost per equivalent unit calculations to two decimal places.) Data From Exercise 16-12 The...
-
Stanford Rosenberg Electronics wants to establish an assembly line for producing a new product, the Personal Little Assistant (PLA). The tasks, task times, and immediate predecessors for the tasks...
-
A company is planning to manufacture snowboards. The fixed costs are $129 per day and the total costs are $5,897 per daily output of 18 boards. What is the average costs per board tend to as...
-
Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in their books. Sales Revenues: $750,000 Cost of Goods Sold (standard costing): $400,500...
-
use the starting code bellow In arithmetic, a number expressed as a quotient, in which a numerator is divided by a denominator. In a simple fraction, both are integers. A complex fraction has a...
-
Consider what the idea of Football as an American thing suggests about U.S. culture. What characteristics of the sport reflect our cultural and capitalist values? Think about the way the sport is...
-
Logan Enterprises is offering 780 shares in a Dutch auction IPO. The following bids have been received. What is the clearing price in the auction? Bidder Quantity Price A 408 32 B C D E 815 28 151 25...
-
Oil has a density of 950kg-3 and the sound travels through it at a speed of 1500m/s. calculate the acoustic impedance of oil
-
Purchases Discounts is what type of account? Explain.
-
Capitalizing the cash cost of a piece of equipment is Multiple Choice A. an asset exchange event B. an asset source event C. an asset use event D. an equity exchange event
-
on 8 For the following set of lengths 130, 170, 160, 160, 150, 190 Third quartile is: et red d out of Select one: O a. 160 a question O b. 145 O c. 175 O d. 180
-
Texas Company experienced the following events during its first year of operations: 1. Acquired an additional $1,000 cash from the issue of common stock. 2. Paid $2,400 cash for utilities expense. 3....
-
The accounts receivable balance for Diva Spa at December 31, 2012, was $56,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $2,450. During 2013, $1,900 of accounts...
-
The following data were taken from the 2010 annual reports of Biogen Idec, Inc., and Amgen Inc. Both companies are leaders in biotechnology. All dollar amounts are in millions. Required a. For each...
-
Cress Trust owns houses in Marion County, for whom Rainbow Realty Group, Inc., sells, rents, and manages. The same person serves as Rainbows president and Cresss corporate trustee. Cress offers four...
-
Genevieve and William Timmons began their tenancy of a ground-floor apartment at Cobblestone Square in September 2011. Kingsley-Johnston, Inc., is a property management company responsible for...
-
Linda Miller rented 35 acres of pastureland in Wabaunsee County, Kansas, from William Burnett for $1,000 per year. Miller and her husband used the land to grow and harvest brome grass for their...
Study smarter with the SolutionInn App