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Star Leisure Group owns and operates a small relaxation hotel with numerous sporting facilities, residential accommodation, a cafeteria and a sports shop. The summer season lasts for 20 weeks including a peak period of 6 weeks corresponding to the school holidays. The following budgets have been prepared for the next summer season:

Accommodation

60 single rooms let on daily basis.

35 double rooms let on a daily basis at 160% of the single room rate. Fixed costs $29,900

Variable costs $4 per single room per day and $6.40 per double room per day.

Sports Centre

Residential guests each pay $2 per day and casual visitors $3 per day for the use of facilities.

Fixed costs $15,500

Sports Shop

Estimated contribution $1 per person per day. Fixed costs $8,250

Cafeteria

Estimated contribution $1.50 per person per day. Fixed costs $12,750

During the summer season, the small relaxation hotel is open 7 days a week and the following activity levels are anticipated:

Double rooms fully booked for the whole season.

Single rooms fully booked for the peak period but at only 80% of capacity during the rest of the season.

Thirty casual visitors per day on average.

As a Senior Manager at the Hotel, you are required:

(a)Estimate the charges for single and double rooms knowing that the small relaxation hotel wishes to make a $10,000 profit on accommodation.

(b)Estimate the anticipated total profit for the small relaxation hotel as a whole for the season.

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