Calculate breakeven and margin of safety after hotel renovation ing Objective 2)

Question

Calculate breakeven and margin of safety after hotel renovation ing Objective 2) a continuation of the Caesars Entertainment Corporation serial cose tist 1. Ref fer to the introductory story in Chapter (see page 43) for additional batb components of the Caesars serial cose can be completed in any ordet Palace Las Vegas will use bucdgets to make its financial plans Let's assurng that res budgets for each of its hotel towers, including the now Julius Tower. Here is m ting assumptions0 for the Julius Tower for 2016 ble for Julius Tower budget assumptions f hotel rooms in the Julius Tower GB/ 91.2% 149 occupancy rate for Caesars Entertainment Corporation otel room rate per night dgeted fixed costs for the Julius Tower cost per Julius Tower room night 2,390,000 21 Requirements any Julius Tower hotel room nights should be budgeted to be booked in How m 16? (Remember that 2016 is a leap year and, therefore, has an extra calendar day 201 or 366 days.) What wou What Prepare a budget for 2016 for the Julius Tower using the assumptions provided above and the numbers you have calculated. Does it appear that the Julius Tower will be wer hotel rooms in 2016 would be the budgeted variable costs for the Julius Tower hotel in 20106 a healthy amount of income for Caesars Palace Las Vegas? Explain.

Explanation / Answer

1 Budgeted Julius tower hotel room nights to be booked=587*91.2%*366=195935.9=195936 room nights 2 Budgeted net revenue=195936*149=29194464 3 Budgeted variable cost=195936*27=5290272 4 Budget 2016 net revenue 29194464 Less: variable cost 5290272 Contribution 23904192 Less:Budgeted fixed cost 2390000 Net income 21514192 It appears that Julius tower will be generating a healthy amount of income of $21514192.

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