Jaguar hotel corporation has a hotel, dining room and conference

Posted: July 31st, 2022

Jaguar Hotel Corporation has a hotel, dining room and conference centre facility. The accountant has presented the following budget data:

Hotel Dining Room Conference Centre Total
Capacity 100 rooms 100 seats 200 seats
Selling price/unit £75 £35 £40
Material costs/unit £5 laundry £15 food £5 refreshments
Other variable costs/unit £5 cleaning £10 labour £1 light & heat

a. Produce a budget that shows the contribution for each of the three services. Rank the three services as to the greatest contributions to profitability. What are the constraints?

b. The marketing manager has asked your advice as to whether to accept EITHER 200 people attending a conference and staying for dinner in two sittings but with no hotel accommodation (which will make it very difficult to sell hotel rooms) OR to refuse the conference booking but to maintain the average 60% hotel occupancy, of which half use the dining room.

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