Skyview Manor Essay examples

1072 Words Apr 8th, 2014 5 Pages
Questions 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(East Double) = (50 / 80) x (8 / 10) = 50.0% $ 2 0 $ 1 0.000
Pr(West Single) = (30 / 80) x (2 / 10) = 7.5% $ 2 0 $ 1 .500
Pr(West Double) = (30 / 80) x (8 / 10) = 30.0% $ 2 5 $ 7 .500
100.0% $ 2 0.875
$20.875 equals the Weighted Average Revenue per
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What is the proposed incremental contribution margin per occupied room/day during the off-season? Calculate Rev per room in off-season
Room Type
Rev per
Room
Weighted
Average
Pr(West Single) = (2 / 10) = 20.0% $ 1 0 $ 2 .000
Pr(West Double) = (8 / 10) = 80.0% $ 1 5 $ 1 2.000
100.0% $ 1 4.000
$14.00 equals the Weighted Average Revenue per Night
Calc Probability
CM = Rev – VC
= $14 – $2.53
= $11.47
4. For each alternative in the case, list the annual expenses that are incremental to that decision alternative but are not related to the room/days occupied?
Alternative – Open in the off season
$2,000 (Repairs) + $500 (Insurance) + $3,200 (Mrs. Kacheck) + $3,360 (Maid) + $1,312
(Payroll Taxes) + $720 (Telephone) + $3,600 (Electricity) = $14,692 Mrs Kacheck - $3,200 = $20/day x 5 days/wk x 4 wks/mo x 8 mos Maid - $3,360 = $15/day x 7 days/wk x 4 wks/mo x 8 mos o Assuming that one maid at 7 days per week is sufficient to clean all the rooms. Payroll Taxes - $1,312 = 20% x ($3,200 + $3,360) Telephone - $720 = $3 x 30 rooms x 8 months Electricity o Electricity per room per month = ($6,360 - $290 x 4 – 8 x 50) / (80 rooms x 4 months) = $15 per available room per month o Electricity in off-season - $3,600 = $15 x 30 rooms x 8 months
Alternative – Advertising
$500 x 8 months = $4,000

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