Skyview Manor

SkyView Manor Case

Question 1

variable Cost

Linen service
$13,920.00
Supplies
$1,920.00
1/2 Misc Exp
$3,657.00
Total
$19,497.00
Revenue
$160,800.00
CM Ratio = 1- (19497/160800)
0.87875
Average room 160800/7680 rooms
$20.94
contribution margin per room
$18.40

Fixed Cost

Depreciation
30000
Property tax
4000
Insurance
3000
Mortgage
21716
Salaries
$27,480.00
payroll Tax
$5,496.00
Repairs
$17,204.00
Utilities
$6,360.00
1/2 misc
$3,657.00
Total
118913
Break even 6463 rooms / 120 nights
54 rooms per night

Question #2

Rooms 17 weekends of 2 nights
34 nights
Lost Contribution Margin

8 rooms x34 (120 x2/7)
5005
Incremental CM

72 Rooms x 34 nights x $5
12240
Additional profit = 12240 - 5005
$7,725

Question #3

West wing Rooms
30

40% occupied on average
12

Single
2.5
$10 a night
Double
9.5
$15 a night
Increase per night
$167.50

Rate per night
$14.00

Total increase
8 months or 245 days

Incremental Revenue
$41,160

Incremental Variable Cost

Cleaning Sup $.2667 per day x units 2940
$784.10

Linens

1/2 Misc (7314/ 2) / 120) x 245 =30.48 x 245
$7,467.60

Total VC
$8,252

Incremental CM
$32,908

2940 Room =
$11.2 per room

Question 4:
Alternatives

Heated covered Swimming pool
$40,000
Life Guard 400 *8
$3,200
Tax and Ins
$2,200
Maintenance
$1,800
Total
$47,200
Swimming pool non-heated or covered
$25,000
Life Guard 400 *3 warm months
$1,200
Taxes
$1,200
Total
$27,400

Question 5
Alternative #1

Total cost 47200 - cm 9360 =
$37,840
37840 / $14 a night = 2702.85 units
2703
Full capacity = 30 units x 240 nights
7200
Current estimated capacity 40%
2880
% needed to break even
77.50%

Alternative #2

Total cost 27400 - 9360
$18,040
18040 / 14 a night = additional units 1288.57
1289
Capacity % needed
57.90%

Question 6:
The alternatives are to open the hotel during the summer or not. Additional alternatives are to build a swimming pool with or without a heating system and bubble. The hope is demand for