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You have been given the following information on the next page about a hotel for the next year The hotel has 40 rooms and expected occupancy rate of 70 percent Rooms department operating expenses

You have been given the following information on the next page about a hotel for the next year. The hotel has 40 rooms and expected occupancy rate of 70 percent. Rooms department, operating expenses, wages, supplies, laundry, and so on is 27 percent of room’s sales revenue.

a. Calculate the hotel’s average room rate for next year.

b. If the hotel did operate at 30 percent double occupancy and management wanted a $15 spread between the single- and double-room rates, what would these rates be?

Administrative and general

$ 38,300

Marketing

28,900

Energy costs

35,100

Repairs and maintenance

28,800

Property taxes

17,600

Insurance

4,800

Telephone department operating loss

(9,700)

Contributory income, food and beverage departments

103,200

First mortgage, at 8% interest, present balance

601,000

Second mortgage, at 12% interest, present balance

402,000

Ownership equity (after-tax return of 15% is expected)

280,000

Book value of fixed assets before depreciation charges:

 

Land

250,000

Building

1,860,000

Furniture and equipment (combined)

382,000

Depreciation rate on building

5%

Depreciation rate on furniture and equipment (combined)

20%

Income tax rate

25%

Jun 24 2020 View more View Less

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