A local government authority owns and operates a leisure centre with numerous sporting facilities, residential accommodation, a cafeteria and a sports shop. The summer season lasts for 20 weeks including a peak period of six weeks corresponding to the school holidays. The following budgets have been prepared for the next summer season:
60 single rooms let on a 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.
Residential guests each pay $2 per day and casual visitors $3 per day for the use of facilities. Fixed costs $15,500
Estimated contribution $1 per person per day.
Fixed costs $8,250
Estimated contribution $1.50 per person per day.
Fixed costs $12,750
During the summer season the centre is opened seven 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.
30 casual visitors per day on average.
a) Calculate the charges for single and double rooms assuming that the authority wishes to make a $10,000 profit on accommodation.
b) Calculate the anticipated total profit for the leisure centre as a whole for the season assuming that the rates calculated in (a) above were used for accommodation.