Budget Assignment
You have been asked to prepare the operating budget for a 150 room hotel, with a 50 seat Coffee Shop, a 100 seat Dining Room and a 25 seat Bar. The operating budget for the year is based on the following information:
Hotel Rooms Department: Occupancy is expected to be 75% with an average room rate of $110.00. Fixed wages for the rooms' department personnel are estimated $320,000. In addition, for every 18 rooms occupied each day, one housekeeper will be required for an 7.5 hour shift at a rate of $11.50 an hour. Staff fringe benefits are 13% of total wages. Linen and laundry costs are estimated @ 9% of total room sales revenue. Supplies and other items are estimated @5% of total room sales revenue.
Food Department:
The Dining Room is open 6 days a week, 52 weeks a year for lunch and dinner only. Lunch seat turnover is 1.5, with an average food cheque of $10.40. Dinner seat turnover is 1.3 with an average food cheque of
$25.90.
The Coffee Shop is open 7 days a week for all meal periods. Breakfast seat turnover is 1.8 with an average food cheque of $6.25. Lunch seat turnover is 1.4 with an average food cheque of $12.35. Dinner seat turnover is 1.1 with an average cheque of $16.10. In addition to these three meals, the coffee shop also serves coffee and snacks with a turnover of 3.0 @ an average cheque of $3.65.
The Bar serves an estimated 25 food orders per day with an average cheque of $13.80. The bar is closed on Sundays and certain holidays, operating a total of 307 days out of the year.
Total payroll costs, including fringe benefits for the food department are estimated @ 48% of total food sales revenues. Other variable costs represent the following % of total food sales revenue.
• Food cost: 39%
• Laundry and Linen: 4%
• Supplies: 8%
• Other Costs: 3%
Beverage Department: (307 operating days a year): Each seat in the bar is expected to generate $6,300 per year. In addition, the bar will be credited with any beverages served in the Coffee Shop and Dining Room. In the Coffee Shop, beverage sales revenue is estimated @ 15% of combined lunch and dinner food sales revenue, and in the Dining Room 25% of combined lunch and dinner food sales revenue.
The beverage department operating costs are as follows:
• Liquor cost 35% of total beverage sales revenue.
• Payroll and fringe benefits are 28% of total beverage sales revenue.
• Supplies and other operating costs are 7% of total beverage sales revenue.
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Admin and general
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$357,600
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Marketing
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3% of total Revenues
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Utilities costs
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$185,300
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Property operation & maintenance
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$225,900
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Insurance
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$54,650
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Property taxes
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$108,300
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From the preceding information prepare a departmental budget for each of the three departments (Hotel Rooms, Food, and Beverage). Then consolidate the departmental budgets into a complete hotel operating budget.
The end result should include 3 departmental budgeted income statements and 1 consolidated hotel budgeted income statement. Please show your work - you will be rewarded part marks even if you don't have the correct answer.