Comment Room Type No. of Rooms Average annual occupancy rate No. of days Room oc
ID: 2583877 • Letter: C
Question
Comment
Room Type No. of Rooms Average annual occupancy rate No. of days Room occupied based on 360 days in a year No. of occupied rooms Ocean Front 50 80 288 14400 Ocean View 250 75 270 67500 Pool Side 18 60 216 3888 One Bedroom Suite 16 50 180 2880 Two Bedroom Suite 16 50 180 2880 91548 1 Determination of yearly total operating cost for CCOR Direct cost Room Type No. of occupied rooms Kitchenware replacement /Repair Complementory Toiletries Complementory Coffee & Tea Total Ocean Front 14400 28800 43200 72000 Ocean View 67500 135000 202500 337500 Pool Side 3888 7776 11664 19440 One Bedroom Suite 2880 5760 8640 14400 28800 Two Bedroom Suite 2880 8640 11520 23040 43200 Total Direct costs 14400 191736 294804 500940 Annual Resource costs Facilities cost-Utilities 210000 Other Facilities costs 1900000 General & Administrative 408000 Hotel Operations 1920000 Total Operating Cost for CCOR 4938940 2 Determination of total cost per room by room type using volume based costing method. Direct cost Room Type No. of occupied rooms Kitchenware replacement /Repair Complementory Toiletries Complementory Coffee & Tea Annual Resource Cost by allocated on the basis of total no. of occupied rooms Total cost No. of rooms Total cost per room by room type Total cost per room by room type per night Ocean Front 14400 28800 43200 776868 848868 50 16977 59 Ocean View 67500 135000 202500 3641570 3979070 250 15916 59 Pool Side 3888 7776 11664 209754 229194 18 12733 59 One Bedroom Suite 2880 5760 8640 14400 155374 184174 16 11511 64 Two Bedroom Suite 2880 8640 11520 23040 155374 198574 16 12411 69 Total 91548 14400 191736 294804 4938940 5439880 We appreciate the rating of our answers Thank You Background The Crystal Coast Ocean Resort (CCOR) is a large, family-owned resort located on one of the finest beaches in North Carolina. The Resort is locally called the "Ramada Inn: Crystal Coast Ocean Resort because it has a contractual relationship with Ramada Inn, Inc which requires Ramada to provide reservation services and certain marketing services. In turn CCOR pays an annual fee to Ramada and displays the Ramada Inn sign. Ramada has the right, under contract, to require CCOR to meet Ramada standards for resort services, cleanliness, etc, and regularly visits CCOR to make sure that these standards are being met. CCOR's main building has a T-configuration, where the top of the T is road- side and the bottom of the T is at the beach. This allows all rooms to have at least a partial view of the beach. There are five types of rooms for guests, ocean front (facing the ocean, at the bottom of the T). ocean view (along the sides of the T), pool side (first floor, with patios having direct access to the pool) and one and two bedroom suites that are located at the top of the T. These rooms are distributed as follows. Ocean Front Ocean View Pool Side One Bedroom Suite Two Bedroom Suite No. of Rooms 50 250 18 16 16 350 The season for CCOR is year-round because of the mild winters, though the occupancy rates vary from 100% during the summer months to less than 50% in the winter months. The average annual occupancy rate for each type of rooms is 80%, 75%, 60%, 50% and 50% for the ocean front, ocean view, pool side, one room and two room suites, respectively. Because the resort is popular with families, the average number of persons per room is greater than for some other motels or hotels. The average number of occupants is three for the ocean front, ocean view, and pool side rooms, four for the one bedroom suite, and six for the two-bedroom suite. The suites are also somewhat larger, 500 square feet for the one bedroom suite, and 900 square feet for the two-bedroom suite, while all other room are 300 square feet CCOR does not have some of the amenities of competing resorts, but instead competes on value pricing and reliable service. It does not offer special services such as room service, exercise room, restaurant, or lounge but it sets high standards for room cleanliness and for the appearance and cleanliness of the pool and grounds. Also, CCOR offer a free breakfast and a free afternoon snack Because of high demand in summer months, CCOR sets relatively high market prices during this season, ranging from $125 to $350 per room depending on room type and day of week. Prices are lower in the fall and spring, and substantially lower in the winter. In order to have better information about price setting and profitability analysis for each of the five room types: ocean front, ocean view, pool side, one bedroom and two bedroom suites, CCOR has gathered additional information to help it determine the cost for each occupied room. Les Broom, the accounting manager, assembled the following data. The data includes information on the four annual resource costs taken directly from CCOR's accounting reports, as well as activity and cost driver information developed by LesExplanation / Answer
3 Computation of cost per each occuppied room Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Direct cost (Same as in part 2): Kitchenware replacement /Repair 5760 8640 14400 Complementory Toiletries 28800 135000 7776 8640 11520 191736 Complementory Coffee & Tea 43200 202500 11664 14400 23040 294804 Annual resource cost: House keeping (Note:1) 64435 64435 64435 107391 193304 494000 Laundry (Note:2) 66758 66758 66758 89011 133516 422800 Grounds and pool (Note:3) 147657 738286 53157 47250 47250 1033600 Registration (Note:4) 169905 159286 127429 106190 106190 669000 Breakfast room (Note:5) 69979 69979 69979 93305 139958 443200 Administration (Note:6) 44851 42048 33638 28032 28032 176600 Security (Note:7) 46829 234143 16858 14985 14985 327800 Room repair and maintenance (Note:8) 85513 85513 85513 142522 256539 655600 Utilities (Note:9) 27391 27391 27391 45652 82174 210000 Total cost 795317 1825338 564597 703139 1045149 Number of occuppied rooms 14400 67500 3888 2880 2880 Cost per occuppied rooms 55 27 145 244 363 Notes: 1. Allocation of House keeping cost: Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of house keeping cost 5% 5% 20% house keeping cost 95000 20400 384000 499400 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of sq.feet 300 300 300 500 900 2300 Hosekeeping cost allocation 64435 64435 64435 107391 193304 494000 (499400*300/2300) (499400*300/2300) (499400*300/2300) (499400*500/2300) (499400*900/2300) 2.Allocation of laundry cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of laundry cost 10% 10% 10% Laundry cost 190000 40800 192000 422800 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of occupants 3 3 3 4 6 19 Hosekeeping cost allocation 66758 66758 66758 89011 133516 422800 (422800*3/19) (422800*3/19) (422800*3/19) (422800*4/19) (422800*6/19) 3.Allocation of Ground & pool cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of ground & pool cost 40% 20% 10% 760000 81600 192000 1033600 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of number of rooms 50 250 18 16 16 350 147657 738286 53157 47250 47250 1033600 (1033600*50/350) (1033600*250/350) (1033600*18/350) (1033600*16/350) (1033600*16/350) 4.Allocation of Registration cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of registration cost 15% 0% 20% 285000 0 384000 669000 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of number of occuppied rooms 288 270 216 180 180 1134 169905 159286 127429 106190 106190 669000 (669000*280/1134) (669000*270/1134) (669000*216/1134) (669000*180/1134) (669000*180/1134) 5.Allocation of breakfast room cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of breakfast room cost 10% 15% 10% Breakfast room cost 190000 61200 192000 443200 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of occupants 3 3 3 4 6 19 Break fast room cost allocation 69979 69979 69979 93305 139958 443200 (443200*3/19) (443200*3/19) (443200*3/19) (443200*4/19) (443200*6/19) 6.Allocation of Registration cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of registration cost 5% 20% 0% 95000 81600 0 176600 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of number of occuppied rooms 288 270 216 180 180 1134 44851 42048 33638 28032 28032 176600 (176600*280/1134) (176600*270/1134) (176600*216/1134) (176600*180/1134) (176600*180/1134) 7.Allocation of Ground & pool cost Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of ground & pool cost 5% 10% 10% 95000 40800 192000 327800 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of number of rooms 50 250 18 16 16 350 46829 234143 16858 14985 14985 327800 (327800*50/350) (327800*250/350) (327800*18/350) (327800*16/350) (327800*16/350) 8. Allocation of Room repairs and maintenance cost: Other Facilities Gen and Admin Hotel operations Total Annual resource cost 1900000 408000 1920000 Determination of house keeping cost 10% 20% 20% Room repairs & maintenance cost 190000 81600 384000 655600 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of sq.feet 300 300 300 500 900 2300 Room repairs cost allocation 85513 85513 85513 142522 256539 655600 (655600*300/2300) (655600*300/2300) (655600*300/2300) (655600*500/2300) (655600*900/2300) 8. Allocation of Utilities cost: Total Utilities cost 210000 Ocean front Ocean view Pool side One bedroom suite Two bedroom suite Total Allocate on the basis of sq.feet 300 300 300 500 900 2300 Room repairs cost allocation 27391 27391 27391 45652 82174 210000 (210000*300/2300) (210000*300/2300) (210000*300/2300) (210000*500/2300) (210000*900/2300)