1. Use the following income statement to answer question a. through f. Round up on to 1/100th. Use 2 decimal places to solve all problems.

Net Income 490

a. What is CMRw?
b. What is total revenue at breakeven?
c. What is total revenue to yield a net income of $500,000?
d. What is rooms revenue when a net income equals $500,000?
e. Revenue at breakeven if fixed costs increase by $300,000?

f. Revenue at breakeven if fixed costs increase by $300,000 and revenue increase 10% for each department through price increase?

2. ABC Hotel has the following operating information:

a. The rooms department generates 60% of the sales revenue and operates with a CMR of 0.7.
b. The F&B department generates 40% of sales revenue and has a CMR of 0.5.
c. Fixed costs per year are $200,000.

d. The hotel's tax rate is 40%.

Required: What sales revenue is required for achieving a net income of $150,000?

Chapter 8 - Approaches to Prickly

I. The Makoto lodge is a 21)0 mom hotel that was built ten years ago for a total project cost of $10.000.000. the market value of the facility is now estimated at
515.000.000 and the general manager estimates that the Inel of guest services is worth at least $3,000 per room per year. A close competitor of the hotel charges S75 per night per room. According to the SI per 51.000 approach to pricing rooms, what should the price of a room night he at the Makoto lodge

a. $40.
b. $50.
c. $53.
d. $75.
e. The answer cannot he determined from the information given.

2. If The Erica Restaurant at the Makotu Villa generates a department loss of 560,000 per year, in order to still meet the owners' financial goals. will the new required average room rate be higher or lower than the average room rate calculated without including the new income from I he Erica Restaurant?
a. I ligher.
b. Lower.
c. Cannot be determined.

3. is a situation in which the percentage change in quantity demanded exceeds the percentage change in price.
a. Elastic demand.
b. Unit Elastic.
e. Inelastic demand.
d. Mark-up.

4. Informal pricing methods fail to consider costs.
a. True.
b. False.

5. The Sugar Plum Inn had an average dinner cover charge of $8.75 during the month of June. when 3,000 patrons were served. E. L. Plum, the owner/manager, increased the dinner menu prices by an average of 5.50 per item. During the first 30 days of July, 2,900 patrons were served dinner, and the average cover charge was $9.25. Compute the price elasticity of demand.
a. .51t.
c.
d. Cannot be determined.

6. is an approach to pricing in a hospitality operation having several revenue-
producing departments that sets prices for goods and/or services in each profit center so as to optimize the entire operation's net income.

a. Ingredient Mark-Up.
b. Integrated pricing.
c. Markup.
d. Yield management.

7. When an integrated-pneing approach is used at a hospitality. operation, which of the following usually results'?
a. Costs decrease for the hospitality operation.
b. Costs increase for the hospitality operation
c. All profit centers maximize profits.
it Some profit centers do not maximize profits

8. Which of the following is a true statement'
a. The ingredient mark-up approach considers all product coots
b. The mark-up is designed to cover all non-product costs, such as labor. utilities, supplies. interest expense, Marc, and also to provide the desired profit
c. The pane ingredient markup considers only the cost of the mayor Ingredient it All of the above.

9. When demand is inelastic: a price increase will total row:nuts.
a. Decrease.
b. Increase.
c. Have no effect on.
d. Decrease, then increase

10. The Park Hotel is located on leJu Island, a popular honeymoon destination area. I or two weeks every spring, thousands of newlyweds travel to the area for fun and relaxation. Which of the following yield management tactics would make sense for pricing man, during these two weeks?
a. Refuse reservations for one-night stays.
b. Sell all rooms at published rates
c. Require a three-day minimum slay at the published rate.
d. All of the above

11. During a recent 30-day period, the El Sol Resin sold 4,000 rooms at an average room rate of S80. During the next 30-day period, the price was increased to SW. and 3,500 rooms were sold What is the price elasticity of demand for the resoll's roms'

12. When the desired food cost percentage is 32%. the multiple used for determining prices using the ingredient mark-up approach is:

13. The ingredient costs associated with a chicken dinner are $215. The desired food cost percentage for chicken is 25%. Using the ingredient mark-up approach, what would he the price of the chicken dinner?

II. If the average roan rate is S50 when MO roans are sold in total, and if the multiple occupancy is 40% and double roam are priced $10 higher than single roam. then the price of a double roan is7