Exam 8: Cost-Volume-Profit Analysis

Use the following data to answer the next 3 questions. The Glorious hotel generally charges conference organisers $65 per delegate attending a one day conference. It also incurs $10 in variable costs per delegate. Over the last few years it has averaged 80 delegates for each conference sold. Last year the hotel incurred $88,000 of fixed costs and allocated $2,000 to each of the 44 conferences that it hosted. -If conferences sold by the Glorious hotel in the current year are expected to attract an average of 80 delegates, how many conferences must the hotel host in the year in order to breakeven?

Which of the following are true in cost-volume profit analysis?

Use this information to answer the next two questions. The following data relates to the Excelsior Hotel that provides overnight accommodation but no other services: $\bullet$ Fixed costs: $120,000 per annum. $\bullet$ Variable cost per room night sold: $10. $\bullet$ Average selling price per room: $110. $\bullet$ Annual after tax target profit: $144,000. $\bullet$ Excelsior's profit taxed at: 40% -What is the Excelsior Hotel's monthly breakeven in terms of rooms sold?

In the course of a year, cost items such as rent, insurance, external property maintenance and a general manager's salary represent what types of cost?

A hotel sells its single room nights for an average of $110 and its double room nights for an average of $140. The variable cost per single room night sold is $8 and the variable cost per double room night sold is $12. The hotel has annual fixed costs of $3,472,000. In the past the hotel has sold three single rooms for each double room sold. Based on the 3:1 sales mix achieved in the past, what combination of single and double room sales must be made in order for the hotel to breakeven?

Which of the following statements regarding contribution margin is correct?

The revenue required to obtain a target net profit can be determined by:

Use the following data to answer the next 3 questions. The Glorious hotel generally charges conference organisers $65 per delegate attending a one day conference. It also incurs $10 in variable costs per delegate. Over the last few years it has averaged 80 delegates for each conference sold. Last year the hotel incurred $88,000 of fixed costs and allocated $2,000 to each of the 44 conferences that it hosted. -If the fixed costs for the hotel are truly $2,000 per conference, how many delegates must be attracted to one of its conferences in order for it to breakeven?

In a profit and loss statement that is prepared using the contribution margin layout:

Break-even is the level of sales where

Which of the following signifies that a target profit level has been achieved:

Percentage contribution margin ratio is:

Use the following data to answer the next 3 questions. The Glorious hotel generally charges conference organisers $65 per delegate attending a one day conference. It also incurs $10 in variable costs per delegate. Over the last few years it has averaged 80 delegates for each conference sold. Last year the hotel incurred $88,000 of fixed costs and allocated $2,000 to each of the 44 conferences that it hosted. -On average, what is the total contribution generated per conference sold?

Use this information to answer the next two questions. The following data relates to the Bravo Hotel that provides overnight accommodation but no other services: Fixed costs: $240,000 per annum; Variable cost per room night sold: $15; Average selling price per room night: $65; Annual after tax target profit: $288,000; Bravo's profit taxed at: 40%. -What is the Bravo Hotel's monthly breakeven in terms of room nights sold?

A hotel sells its single room nights for an average of $100 and its double room nights for an average of $130. The variable cost per single room night sold is $10 and the variable cost per double room night sold is $12. The hotel has annual fixed costs of $1,358,000. In the past the hotel has sold three single rooms for each double room sold. Based on the 3:1 sales mix achieved in the past, what combination of single and double room sales must be made in order for the hotel to breakeven?

A hotel sells its single room nights for an average of $90 and its double room nights for an average of $120. The variable cost per single room night sold is $10 and the variable cost per double room night sold is $20. The hotel has annual fixed costs of $884,000. In the past the hotel has sold three single rooms for each double room sold. Based on the 3:1 sales mix achieved in the past, what combination of single and double room sales must be made in order for the hotel to breakeven?

Use this information to answer the next two questions. The following data relates to the Exquisite Hotel that provides overnight accommodation but no other services: Fixed costs: $252,000 per annum; Variable cost per room night sold: $14; Average selling price per room night: $84; Annual after tax target profit: $63,000; Bravo's profit taxed at: 40%. -What is the Exquisite Hotel's monthly breakeven in terms of room nights sold?

An ice cream stall is planning to sell 1,000 ice creams at $4 each at the next Gold Coast grand prix event. This will generate a contribution margin ratio of 75%. If the ice cream stall will break even at this level of sales, what are its fixed costs associated with the event.

Use this information to answer the next two questions. The following data relates to the Excelsior Hotel that provides overnight accommodation but no other services: $\bullet$ Fixed costs: $120,000 per annum. $\bullet$ Variable cost per room night sold: $10. $\bullet$ Average selling price per room: $110. $\bullet$ Annual after tax target profit: $144,000. $\bullet$ Excelsior's profit taxed at: 40% -What annual number of rooms sold does the Excelsior Hotel have to achieve in order to achieve its target level of profit?

Which of the following is not needed to calculate breakeven level: