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Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib

Estimating variable and fixed costs, and predicting total operating cost based on occupancy rate.

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Added on  2023-06-18

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This page contains solved assignments and essays related to work performance, break-even analysis, contribution margin ratio, and more for Faculty of Business, Law & Tourism. It includes formulas, working notes, and explanations for each question. The content is useful for students pursuing courses in business, law, and tourism.

Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib

Estimating variable and fixed costs, and predicting total operating cost based on occupancy rate.

   Added on 2023-06-18

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Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib_1
Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib_2
Contents
QUESTION 1.................................................................................................................................................3
QUESTION 3.................................................................................................................................................4
QUESTION 4.................................................................................................................................................6
(c) Explain how you would determine which variance to examine further in relation to a work
performance?..........................................................................................................................................7
QUESTION 6.................................................................................................................................................8
6. What is meant by a product’s contribution margin (CM) ratio? How is this ratio useful in planning
business operations?...............................................................................................................................9
Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib_3
QUESTION 1
The cost formula can be worked given below:
When the occupancy rate is 80%, no beds = 550 * 80% = 440
Therefore, the number of days without occupied beds = 440 * 30 = 13200
Total operating cost for 30 days = 13200 * 32 = $422,400
When 60% is occupied, no bed = 550 * 60% = 330
Therefore, the number of days without a bed = 330 * 30 = 9900
Total operating costs for 30 days = 326700
Use high-low method
Difference in sleeping days = 80%-60% = 20% * 550 * 30 = 90 * 30 = 3300 sleeping days
Operating cost difference = 422400 - 326700 = 90,700
Therefore, the daily variable cost per bed = 95700/3300 = $29
Fixed costs = 60% of total operating costs - 60% of variable costs on the day of stay
That is FC = 326700 - 9900 * 32 = 39600
Cost function, C = 39600 + 7 * B
Where C = total cost
B = number of days in bed
2. For a 70% occupancy rate, the number of bedtimes is 550 * 70% * 30 = 11550
Therefore, operating cost = 39600 + 7 * 11550 = 394,482
3. Given information for the activity level of 6800 units
1 Total variable cost 125,188
2 The total fixed cost. 164,152
Solved assignments and essays for Faculty of Business, Law & Tourism - Desklib_4

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