Question

The Problem Rodeos have long been a part of the culture in the southernmost part of the country and the growing popularity of the annual Easter event across South America prompted the Rupununi Development Corporation to construct a luxury resort with 60 two-bedroom suites for the visiting cultural troupes (troupe leaders and artistes). Capacity is ten troupe leaders and fifty artistes. Each suite is equipped with a small kitchenette, which contains a 7.3 cu ft. refrigerator, a microwave, and a coffee maker. A Drystan 6-piece bedroom set and the Ashley stationary sofa and love seat (all imported from Manaus at considerable cost) are also part of the furnishings. Each accommodation also has an excellent view if the Kanuku Mountains and nearby savannahs. The facility cost the Corporation $1,920,000 to build and equip and depreciation $160,000 per year (a fixed cost). Other operating costs include: Labor $320,000 per year plus $5 per suite per day Utilities $158,000 per year plus $1 per suite per day Miscellaneous $100,000 per year plus $6 per suite per day In addition to these costs, costs are also incurred on food and beverage for each guest. These costs are strictly variable, and (on average), are $40 per day for troupe leaders and $15 per day for artistes. Required Part A Assuming that the facility can maintain an average annual occupancy of 80% in both troupe leader and artistes suites (based on a 360 -day year), calculate the following: i. the annual fixed costs ii. the variable cost per guest by type of guest iii. the annual number of guest days by type of guest​

Answer 1

To calculate the required values based on the given information:

Part A:

i. Annual fixed costs:
Depreciation is a fixed cost, and it is given that the facility's annual depreciation cost is $160,000. Therefore, the total annual fixed costs would be:

Total annual fixed costs = Depreciation cost = $160,000

ii. Variable cost per guest by type of guest:
The variable cost per day for troupe leaders is $40, and for artistes, it is $15. The variable cost per guest can be calculated by multiplying the variable cost per day by the number of days of stay:

Variable cost per troupe leader guest = $40 x 1 guest x 360 days = $14,400
Variable cost per artiste guest = $15 x 1 guest x 360 days = $5,400

iii. Annual number of guest days by type of guest:
Assuming an average annual occupancy of 80% in both troupe leader and artistes suites, the annual number of guest days can be calculated as follows:

Number of troupe leader guest days = 10 guests x 360 days x 80% occupancy = 2,880 guest days
Number of artiste guest days = 50 guests x 360 days x 80% occupancy = 14,400 guest days

Therefore, the annual fixed costs are $160,000, the variable cost per troupe leader guest is $14,400, the variable cost per artiste guest is $5,400, and the annual number of troupe leader guest days is 2,880 and the annual number of artiste guest days is 14,400.