Help with Short Term Decisions Please ,

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I have a question i have had to resubmit a couple of times and am not sure what i am doing wrong.

Kings B&B IS A BED AND BREAKFAST ESTABLISHMENT
There are 10 rooms priced at £22 per night the B&B is open 7 nights per week the following are typical costs:
Weekly costs

heat & light £42
Cleaning staff(basic) £100
admin £90
Breakfast staff £72
Other o/heads £60

Cost per guest night

breakfast food £4
cleaning staff bonus £2
Laundry £3


The question asks to calculate the weekly Profit or loss if there were 42 guest nights in a week ie: an average of 6 guests on each of the 7 nights.
Really appreciate if some one can clarify this for me .

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Help with Short Term Decisions Please ,

    Jennie

    If we start by saying that the
      Weekly costs should be treated as not changing according to how many people stay the night, so if there are 42 or 0 the cost is fixed
        Cost per guest night is a variable cost and the total cost of breakfast food etc will depend on how many people stay the night.
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        Total fixed cost is
        heat & light £42
        Cleaning staff(basic) £100
        admin £90
        Breakfast staff £72
        Other o/heads £60
        £364
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        Total variable cost per guest night is:-
        breakfast food £4
        cleaning staff bonus £2
        Laundry £3
        £9

        So the contribution per guest night is:-
        Price - variable cost per night
        £22 - £9 = £13

        if there were 42 guest nights in a week
        Then total contribution is
        42 x £13 = £546

        Fixed costs are £364

        So the profit is £182
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        Excellent Thankyou so much Sandy i was incorperating total cost of £22 per guest and multiplying by 42 guest nights .I can see why i was going wrong now .Do you have the osbourne books at all, i also have a query on a marginal cost i cant see why i am wrong as i have worked through a case study in my tutorial book and what i have done in my W/B excercise is exactly the same method. the question is 8.8 profit statement . If not i will speak with my tutor once i go back on monday . Thankyou once again.
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        I use Osborne Books with my class

        The book I have is at work, please can you spell out the problem and I'll try to help

        sandy
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        During ltd manufactures one product
        no units manufactured 10000
        number of units sold 8000
        selling price £4 per unit
        direct materials £8000
        direct labour £16000
        fixed production overheads £10000

        There were no finished goods stock at start of month both direct materials and labour behave as variable cost: Produce a profit statement using marginal cost and absorption costing

        on my profit statement for marginal costing i have :

        sales @ £4 each = £32000
        Variable cost
        direct material @ £1 each = 8000
        direct labour @ £2 each
        less closing stock (marginal cost £6000)
        2000 units x £3
        fixed production o/heads £10000
        profit £4000

        would really appreciate your help with this one . trying to get through my resubmits so i can concentrate on exam revision .














      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        Jennie
        If you send me an email, i can send this back on a spreadsheet as an attachment

        sandy.hood@chichester.ac.uk
      • System
        System Posts: 100,534 🤖 Admin 🤖
        Re:Help with Short Term Decisions Please ,

        Thankyou Sandy, That would be fantastic .

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