Reference no: EM132507958

Point 1: An 80 room motel forecasts its average room rate to be $68 for next year @ 75% occupancy. The rooms department has a fixed wage cost of $186,000. Variable wage cost for housekeeping is $9 an hour. It takes half an hour to clean a room. Benefits are 18% of total wages. Linen, laundry, supplies, and other direct costs are $2.75 per occupied room per day.

Point 2: The Motel also has a 50 seat, limited menu snack bar. Breakfast revenue is derived solely from customers staying overnight in the motel. On average, 40% of occupied rooms are occupied by two persons, and 80% of the overnight guests will eat breakfast. Average breakfast check is $6.5. Lunch seat turnover is 1.5 with an average check of $9. The average dinner check is $12 at 2.0 seat turnover rate.

Point 3: The snack bar is open 365 days a year for all three meals. Direct costs for the snack bar are 78% of the total sales revenue.
Indirect cost for the motel is estimated at $580,000 for next year.

Question 1: Calculate a budget income statement for each department and a consolidated total income statement to determine operating income.