Problem 18 The condensed income statement of the Allen Hotel (AH) is as follows: Variable...
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Problem 18 The condensed income statement of the Allen Hotel (AH) is as follows: Variable Costs Fixed Costs ept Income Revenue $5,000,000 $1,000,000 500,000 800,000 500,000 Rooms Food Gift shop 2,000,000 400,000 150,000 200,000 100,000 (100,00 4,250,000 950,000* 2,800,000 500,000 100,000 s 400.000 Other Total department income200000 200,000 100,000 0.000 Other variable expenses Other fixed costs Pretax income Income taxes Net income "Management fees and rent expense vary with rooms revenue. "Includes depreciation of $800,000 Required 1. Compute the AH's weighted average CMR. Consider all variable costs. 2. Compute the AH's breakeven point. 3. If the AH desires to earn (net income) $500,000, what must its total food sales equal? (Assume the sales mix is constant.) 4. If the AH desires to generate pretax cash flow of $800,000, what must its total revenue equal? Assume its debt reduction payment is $300,000 for the year and it plans to pur- chase equipment for $100,000 using cash. 5. If the sales mix charges to rooms 60 percent, food 30 percent, gift shop 5 percent, and other 5 percent, what is the revised CMR
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