AC3025- Hospitality Finance

Final Exam- revised June, 2012

1. Compute the projected revenue level for July using a four-month moving average and the following sales data

January $180,000

February$220,000

March$230,000

April$200,000

May$250,000

June$280,000

2. A motel has an occupancy rate of 75%, with 260 rooms available per day. At an ARR of $68; forecast room revenue for the month using 30 days.

3. Compute the variable cost per unit and the fixed cost per month for the semi-variable expense based on the information provided using the high-low method

Month  Volume   Labor Cost

1         1500        $280

2         1280        $220

3         2500        $380

4         1750        $310

5         1250        $230

4. If menu prices increase by 5% next year and volume increases by 8% beginning January 1st, forecast sales for the first 6 months

MonthSalesPrice IncreaseVolume increase = Budget

January         35,000

February        38,000

March            44,500

April              32,500

May               48,000

June              46,000

5. Use the weighted average to compute the average room rate from the following information:

RoomsRate

Single45$65.00

Double55$85.00

Suite15$125.00

6. Use the following information

Sales = $537,000

Average Guest Check = $18.75

Food Cost Percent = 35.0%

IBIT = $150,000

Calculate Break-even point

7. Complete the in/off season analysis for the following information

Last YearIn-SeasonOff-SeasonIf Closed

(12 months)(9 months)(3 months)off-season

Sales$400,000$300,000

VC$300,000

CM$100,000

FC$ 60,000

IBIT$ 40,000

8. Use the CVP analysis method to calculate sales revenue required to achieve an IBIT of $75,000 with the following forecast data: Sales Forecast = $373,000

Variable costs = $167,000

Fixed costs = $103,000

Determine sales required to achieve an IBIT objective of $75,000

9. Calculate the payback period for the following project. Use straight-line depreciation.

Purchase of equipment$100,000

Annual Savings$30,000

Depreciable life of asset5 years

Salvage value0

10. Use the following information to determine the cause of sales variances: (10 points)

BudgetActualVariance

Room Sales463,500516,750

Information from managers budget working papers

Rooms:4,500

Average room rate:$103.00

Current months statistics from the accounting department

Rooms:5,300

Average room rate:$97.50

11. Provide a series of flexible budgets giving Sales, Variable Costs, Fixed Costs and Net Income for the year for estimated sales levels of 1000, 1500, and 2000 units; using fixed costs of $3,000 and variable costs per unit of $3.00 assuming a sales price per unit of $5.25

Unit Sales 100015002000

Sales Dollars

Variable Costs

Fixed Cost

_________________________________________________________________

IBIT

12. Calculate the first month's ending cash balance for the following:

Beginning cash balance of $15,000

$200,000 Sales, with 40% paid in cash. Half of the sales on account is paid equally in the month of sale and the next month.

Expenses were $120,000 all on credit. 20% paid in the month of purchase and the balance paid the second month.