Skyview Manor - 1075 Words

Question 1— On average, how many rooms must be rented each night in season for the hotel to breakeven? Calculating the break-even occupancy level requires splitting the costs in Exhibit 1 into the fixed and variable components: a) Variable Costs: Cleaning supplies $ 1,920 Linen service $13,920 1/2 Misc. expense $ 3,657 $19,497 b) Per Occupied Room Night = $19,497 à · 7,680 (120 80 80%) = $2.54 c) Contribution Margin: Average revenue $160,800 à · 7,680 = $20.94 Revenue - Variable Cost = $20.94 -$2.54 = $18.40 d) Fixed Costs: Total Costs - Variable Costs = Fixed Costs $138,410 - $19,497 = $118,913 e) Break Even = $118,913 / $18.40 = 6,463 room nights Per night (à · 120) = 54 rooms (68% occupancy) Skyview 1 Skyview 2†¦show more content†¦Depreciation of $30,000 with a 15 year life implies buildings furnishings of $450,000. Skyview 8 2. Interest expense of $21,716 for the first year at 5% interest implies an average one year old mortgage balance of about $434,000 [beginning balance (new mortgage) of $440,000 and ending balance of $430,00]. Assuming a normal mortgage limit of 80% of value, the property is worth about $550,000. 3. This would imply about $100,000 for non-depreciable land (550,000-450,000), which seems reasonable. 4. There is probably very little working capital investment here—no receivables, very little inventory, and perhaps some modest accruals for wages, payroll taxes and miscellaneous bills. We would estimate a net of about zero, except for cash. 5. The cash balance would have to be large enough to support the float on day to day operations over the year. Exhibit 1 here is a rough estimate of cash flows over the twelve months. The business would need about $55,000 in cash at the end of a season (April 1) to carry it through until December (including a 10% cushion). From December to March, the business probably needs about $20,000 in cash at any time (roughly, 1 month’s payments plus a 10% cushion). Thus, at March 31 we would estimate a cash balance of probably $55,000Show MoreRelatedSkyview Manor617 Words   |  3 Pagesï » ¿ SkyView Manor Case Question 1 variable Cost Linen service $13,920.00 Supplies $1,920.00 1/2 Misc Exp $3,657.00 Total $19,497.00 Revenue $160,800.00 CM Ratio = 1- (19497/160800) 0.87875 Average room 160800/7680 rooms $20.94 contribution margin per room $18.40 Fixed Cost Depreciation 30000 Property tax 4000 Insurance 3000 Mortgage 21716 Salaries $27,480.00 payroll Tax $5,496.00 Repairs $17,204.00 Utilities $6,360.00 1/2 misc $3,657.00 Total 118913 Break even 6463 rooms /Read MoreSkyview Manor Case792 Words   |  4 Pagesï » ¿ ACC 5850 Skyview Manor Case 1. On average, how many rooms must be rented each night in season for the hotel to break even? Variable Costs: Cleaning Supplies $1,920 Linen Service $13,920  ½ Misc Expenses $3,657 $19,497 (Total Variable Cost) Variable Cost per Occupied Room Night: = =$2.54. Contribution Margin: Average Revenue = = $20.94 Contribution Margin = Revenue – Variable Cost = $20.94 – $2.54 = 18.40. Fixed Costs: = Total Costs – VariableRead MoreSkyview Manor Case Essay3230 Words   |  13 PagesThe principal question of the case study is whether Skyview Manor should stay open during the off-season or not. Currently, Skyview Manor is operating during the skiing season which opens a total of 120 hotel operating days but if they remain open the hotel will operate 365 days a year. The manager of the hotel, Mr. Kacheck, is worried about off-season losses. Mr. Kacheck proposed following ideas in order to increase the occupancy and decrease the losses. * Stay open in the off-season andRead MoreSkyview Manor Essay800 Words   |  4 Pages1. On average, how many rooms must be rented each night in season for the hotel to breakeven? We calculate the blended rate for each of the wings using the single room and double room rates and occupancy ratios. The daily expense during the season is - Hence to break even we must have occupancy to cover $1,153.42 in costs on a daily basis. Assuming equal occupancy (x) in East Wing and West Wing we get the equation as (24*30 + 19*50)*x = 1153.42. We get occupancy as 69.1 percent. HenceRead MoreSkyview Manor Essay examples1072 Words   |  5 PagesQuestions for Skyview Manor 1. On average, how many rooms must be rented each night in season for the hotel to breakeven? First Alternative: Step 1: Calculate Weighted Average Revenue per room = [Pr(Specific Room Type) x Rent for Specific Room Type] Pr(East) = 50 / 80 Pr(West) = 30 / 80 Pr(Single) = 2 / 10 (Keep in mind that 2:8 implies a ratio of 2/10) Pr(Double) = 8 / 10 Room Type Rev per Room Weighted Average Pr(East Single) = (50 / 80) x (2 / 10) = 12.5% $ 1 5 $ 1 .875 Pr(EastRead MoreDirt Bike1883 Words   |  8 Pagescost, which is $140 while the -8- downtime would cost $170 or 15% of the initial purchase cost. New Customer Database Design Customer ID 1 Last Name Mann First Name Dwight Street 23 Colby Ln. 3 Pinehill Rd. 38 Ryder Rd. 8 Belle Ave. 66 Skyview Terrace 722 Donald Dr. 11 Buena Vista Dr. 523 Grant St. 68 Clinton St. 95 Canyon Dr. 23 Colby Ln. 38 Ryder Rd. Customer Database City State Zip Tacoma WA 98109 Phone (253)1234333 (435)7973322 (402)4716950 (928)3825877 (505)5824301 (714)2785564 (805)4137922