Soverign Lodge

SOVEREIGN LODGE

1]. List all the relevant decision alternatives in Mr.Kacheck’s proposal.

The relevant decision alternatives in Mr. Kacheck’s proposal are listed below... OPTION 1: Open in summer without advertisement.

OPTION 2: Open in summer with advertisement.

OPTION 3: Open with pool, no bubble and with the Advertisement.

OPTION 4: Open with pool, bubble and with the Advertisement.

OPTION 5: The presently existing values. NOTE: we don’t calculate the alternative for each no pool because in the case study they have mentioned that in the long time run the viability of the pool should stay even with the competition

So these are the six alternatives relevant decision in Mr.Kacheck’s proposal.

2. For each alternative from question 1, list the annual expenses that are incremental to that decision alternative but are not related to the room/days occupied, i.e. the incremental fixed costs for each alternative.

Option 1: Open in summer without advertisement.

Option I
Description existing open in summer without adv Revenues 160800 180960 Salaries
Manager 15000 15000 mgr wife 2400 5600
Desk clerk 2880 2880
Maids (4) 7200 21600
Total 27480 45080
Payroll taxes & fbt 5496 9016
Depreciation 30000 30000
Property taxes 4000 4000
Insurance 3000 3000
Repairs & maint 17204