The owner of

Brooklyn

Restaurant is disappointed because the restaurant has been averaging

5,000

pizza sales per​month, but the restaurant and wait staff can make and serve

8,000

pizzas per month. The variable cost​ (for example,​ingredients) of each pizza is

$1.35.

Monthly fixed costs​ (for example,​ depreciation, property​ taxes, business​ license, and​ manager's salary) are

$8,000

per month. The owner wants cost information about different volumes so that some operating decisions can be made.

Requirement 1. Use the chart below to provide the owner with the cost information. Then use the completed chart to help you answer the remaining questions. ​(Enter total variable costs to the nearest dollar. Enter costs per​ pizza, price per​ pizza, and profit per pizza to the nearest​ cent.)

Problem 13-59 (Static) Prepare Budgeted Financial Statements (LO 13-6, 7)

HomeSuites is a chain of all-suite, extended-stay hotel properties. The chain has 15 properties with an average of 200 rooms in each property. In year 1, the occupancy rate (the number of rooms filled divided by the number of rooms available) was 70 percent, based on a 365-day year. The average room rate was $180 for a night. The basic unit of operation is the “night,” which is one room occupied for one night.

The operating income for year 1 is as follows.

In year 1, the average fixed labor cost was $400,000 per property. The remaining labor cost was variable with respect to the number of nights. Food and beverage cost and miscellaneous cost are all variable with respect to the number of nights. Utilities and depreciation are fixed for each property. The remaining costs (management, marketing, and other costs) are fixed for the firm.

At the beginning of year 2, HomeSuites will open three new properties with no change in the average number of rooms per property. The occupancy rate is expected to remain at 70 percent. Management has made the following additional assumptions for year 2.

• The average room rate will increase by 5 percent.
• Food and beverage revenues per night are expected to decline by 20 percent with no change in the cost.
• The labor cost (both the fixed per property and variable portion) is not expected to change.
• The miscellaneous cost for the room is expected to increase by 25 percent, with no change in the miscellaneous revenues per room.
• Utilities and depreciation costs (per property) are forecast to remain unchanged.
• Management costs will increase by 8 percent, and marketing costs will increase by 10 percent.
• Other costs are not expected to change.

Required:

Prepare a budgeted income statement for year 2.

First, BICA is considering the purchase of the Empty Arms hotel. Next year's NOI and cash flow is expected to be $2,000,000 and BIC's economic forecast of market supply and demand and vacancy levels indicated they will continue to be in balance. As a result NOI should increase by 1.5 percent each year based upon expected capital improvements, and BIC believes they should earn 9% total return on the investment.

What is the estimated value of the property?

What cap rate should be found from recently sold properties that are comparable to Empty Arms? NOTE how the cap rate reflects the growth in NOI.

Should they purchase this investment if the negotiated asking price is $27M?

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows:

Type I rooms do not have wireless Internet access and are not available for the Business rental class.

Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 140 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 40 rentals in the Business class. Round Tree has 125 Type I rooms and 135 Type II rooms.

1. Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types.
   

   Variable	# of reservations
   SuperSaver rentals allocated to room type I
   SuperSaver rentals allocated to room type II
   Deluxe rentals allocated to room type I
   Deluxe rentals allocated to room type II
   Business rentals allocated to room type II

   
   Is the demand by any rental class not satisfied?

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows: Rental Class Super Saver Deluxe Business Type I $30 $35 -- Room Type II $20 $30 $40 Type I rooms do not have Internet access and are not available for the Business rental class. Round Tree’s management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 130 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 50 rentals in the Business class. Round Tree has 100 Type I rooms and 120 Type II rooms.

Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types. Summarize the model in algebraic form by defining the decision variables, the objective function and all the constraints.

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows: Rental Class Super Saver Deluxe Business Type I $30 $35 -- Room Type II $20 $30 $40 Type I rooms do not have Internet access and are not available for the Business rental class. Round Tree’s management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 130 rentals in the Super Saver class, 60 rentals in the Deluxe class, and 50 rentals in the Business class. Round Tree has 100 Type I rooms and 120 Type II rooms. Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types. Summarize the model in algebraic form by defining the decision variables, the objective function and all the constraints. PLEASE DO NOT USE EXCEL TO SOLVE.

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows:

Rental Class

Room Super Saver Deluxe    Business

Type I    $32 $43    —

Type II $17 $35 $39

Type I rooms do not have wireless Internet access and are not available for the Business rental class.

Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 120 rentals in the Super Saver class, 70 rentals in the Deluxe class, and 55 rentals in the Business class. Round Tree has 105 Type I rooms and 120 Type II rooms.

Use linear programming to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types.

Variable# of reservations

Supersaver rentals allocated to room type I ?

Supersaver rentals allocated to room type II ?

Deluxe rentals allocated to room type I ?

Deluxe rentals allocated to room type II ?

Business rentals allocated to room type II ?

Is the demand by any rental class not satisfied?
Explain.
How many reservations can be accommodated in each rental class?

Rental Class# of reservations

Supersaver ?

Deluxe ?

Business ?

Management is considering offering a free breakfast to anyone upgrading from a Super Saver reservation to Deluxe class. If the cost of the breakfast to Round Tree is $5, should this incentive be offered?

With a little work, an unused office area could be converted to a rental room. If the conversion cost is the same for both types of rooms, would you recommend converting the office to a Type I or a Type II room?

Why?

Could the linear programming model be modified to plan for the allocation of rental demand for the next night?

What information would be needed and how would the model change?

Successful hotel managers must have personality characteristics often thought of as feminine (such as "compassionate") as well as those often thought of as masculine (such as "forceful"). The Bem Sex-Role Inventory (BSRI) is a personality test that gives separate ratings for female and male stereotypes, both on a scale of 1 to 7. A sample of 148 male general managers of three-star and four-star hotels had mean BSRI femininity score x = 5.29. The mean score for the general male population is μ = 5.19. Before you trust your results, you would like more information about the data. What facts would you most like to know? (Select all that apply.)

1- Whether the chosen general managers are an SRS of the population.

2- Whether the margin of error takes into account the nonresponse rate.

3- What is the significance level?

4- Whether there are outliers in the sample.

Round Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows:

Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 150 rentals in the Super Saver class, 55 in the Deluxe class, and 40 in the Business class. Since these are the forecasted demands, Round Tree will take no more than these amounts of each reservation for each rental class. Round Tree has a limited number of each type of room. There are 100 Type I rooms and 110 Type II rooms.