Serial dC Calculate breakeven and margin of safoty after hotel renovation The Ma

Question

Serial dC Calculate breakeven and margin of safoty after hotel renovation The Master Bud C9-73 Learning Objective 2) a continuation of the Caesars Entertainment Corporation serial case that began Refer to the introductory story in Chapter 1 (see page 43) for additional ba components of the Caesars serial case can be completed in any order nd. (The alace Las Vegas will use budgets to make its financial plans. Let's assurr res budgets for each of its hotel towers, including the new Julius Tower rs prepares assumptions for the Julius Tower for 2016 Julius Tower budget assumptions I rooms in the Julius Tower budgeting ist of budgeting Here is a Data table un rate for Caesars Entertainment Corporation 587 e hotel room rate per night udgeted fixed costs for the Julius Tower 91.2% 149 ble cost per Julius Tower room night $ 2,390,000 Varia 27 Requirements How many Julius Tower hotel room nights should be budgeted to be booked in 2016? (Remember that 2016 is a leap year and, therefore, has an extra calendar day ohast would be the budgeted net revenue fom the Juiu Towr hote rooms-in 20161 366 days.) hat would be the budgeted net revenue from the Julius Tower hotel rooms in 2016 Tower 2. 3. What 4. Prepa t would be the budgeted variable costs for the Julius Tower hotel in 2016 a budget for 2016 for the Julius Tower using the assumptions provided above re ve calculated. Does it appear that the Julius Tower will be ating a healthy amount of income for Caesars Palace Las Vegas? Explain. enerating a healtou have car the Juli s f

Explanation / Answer

1)BUdgeted Number of room nights : NUmber of hotels * % occupancy rate*number of days

          = 587*.912*366

             = 195935.90   [rounded to 195,936]

2)Net revenue =budgeted hotel rooms *rate

             = 195936* 149

              =$ 29,194,464

3)BUdgeted variable cost : 195936 *27

            = 5290272

4)

yes ,Julius tower is generating a healthy amount of income

Budgeted Income statement Revenue 29194464 variable cost (5290272) contribution margin 23904192 less fixed cost (2390000) net income 21,514,192

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