You have received a promotion and are now the manager of the Lakeview Lounge at the hotel where you have been working for some time. The Lakeview Lounge provides alcoholic and non-alcoholic drinks, plus a range of light snacks during the day when the hotel restaurant is not open.
The monthly budget for the Lakeview Lounge profit centre is pre- pared by head office, in another city. You are responsible for making the lounge profitable for the hotel.
Instructions
(a) Identify the fixed and variable costs for the Lakeview Lounge and indicate if they are controllable by the lounge manager. For over- head costs, indicate if they are direct or indirect.
(b) How much discretion would you expect to receive over selling prices, and why?