Question

local area authrity in USA owns and operate a leisure center with numerius sporting facilities . Residental accomodation , cafeteria and sport shop . the summer season last for 20 weeks including the peak period of 6 weeks corresponding to the school holidays , the following budgets have been preppared for the next summer season

accomodation :

60 single rooms lets on daily bases

35 double room let in daily bases at 160 % of the single room rate

fixed cost : 29900 USD

variable cost 4 $ persingle room per day , and 6.40 $ per double room per day

sport center :

Residential guests each day pay 2$ per day and causal visitors 3$ per day for the use of facilities

fixed cost : 15500 $

sport shop :

estimated contribution 1$ per person per day

fixed cost 8250 $

Cafeteria :

estimated contribution 1.50$ per person per day .

fixed cost 12750 $

_{during summer season the center is open 7 days a week and the folowing activitity levels are anticipated :}

_{double room fully booked for whole season}

_{single room fully booked for the peak period but only 80% of capacity during the rest of season .}

_{30 casual visitors per day on average} .

you are required to :

1- estimate the charges for single room and double room assuming that the authrity wishes to make 10000$ profit on accomodation .

2- calcluate the anticipated total profit for the leisure center as a whole for the season .

Answer 1

		A	Target profit from accomodation	$10,000
		B	Fixed cost of accomodation	$29,900
		C=A+B	Total Contribution required	$39,900
		D	Variable costs per Single room per day	$4
		E	Number of Single rooms available	60
		F	Number of days	120	(6*7+14*0.8*7)
		G=D*E*F	Total variable costs of single rooms	$        28,896
		H	Variable costs per Double room per day	$            6.40
		I	Number of double rooms available	35
		J	Number of days	140	(20*7)
		K=H*I*J	Total variable costs of Double rooms	$        31,360
		L=G+K	Total variable costs for Accomodation	$        60,256
			Sales Revenue-Total Variable Cost= Total Contribution
		M=C+L	Total Sales Revenue Required	$100,156
			Assume Charges of Single room=S(per day)
			Charges for double room=(1.6*S)per day
			Total Revenue from Single room=	7200*S	(60*120*S	7200
			Total Revenue from Double room=	7840*S	(35*140*1.6*S)		7840
			Total Revenue from accomodation:
			7200*S+7840*S=$100,156			15040
			15040*S=	$100,156
			S=104860/15040=	$6.66
			Estimated Charges for Single room per day	$6.66
			Estimated Charges for Double room per day	$10.65	(6.66*1.6)
		2	Anticipated Total Profit
			Sports Center:
			Revenue fromResidential Guests(Single room)	$        14,400	(60*120*$2)
			Revenue fromResidential Guests(Double room)	$        19,600	(35*2*140*$2)
			Revenue from casual visitors	$        12,600	(30*140*$3)
			Total Revenue	$        46,600
			Fixed Costs	$15,500
		N	Profit from Sports Center	$        31,100
			Sport Shop:
			Expected Contribution	$        21,200	(60*120*$1+35*2*140*$1+30*140*$1)
			Fixed cost	$8,250
		P	Profit from Sport Shop	$        12,950
			Cafeteria:
			Expected Contribution	$        31,800	(60*120*$1.5+35*2*140*$1.5+30*140*$1.5)
			Fixed Cost	$12,750
		Q	Profit from Cafeteria	$        19,050
		R=A+N+P+Q	Anticipated Total Profit for the leisure for the whole Season	$73,100