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HTM 223 Online Project - Gross Margin Income Statement Please

HTM 223


Online Project ? Gross Margin Income Statement


Please create an annual income statement in the gross margin format for Lindsay?s Legacy Cottages, a 25-cottage bed and breakfast mini resort located at the Benziger Family Winery. The B&B operates seasonally, so the income statement will be based on their operating revenues and expenses for April thru September (153 days). 


There are 5 total sources of revenue and 5 sources of cost of goods sold.


The property?s rack rate is $275 with a yield of 88%. Their occupancy is 90% on average for the time period they are open, and the cost of sales for room revenue is 5% of room revenue.


Information on the various sources of additional revenues is as follows: Food and beverage revenue is calculated using $12 per person avg. guest check for food and $8 per person for beverages based on 2 people per room each occupied room night. (Hint: determine the total number of annual occupied room nights and multiply that by 2 to get the total number of people dining for the year). Cost of sales for food is 40% and for beverages it is 20%.


Wine tasting tours bring in 25% of room revenue (on top of the room revenues ? add it as its own source of revenue )with a 10% cost of sales. Retail wine by the bottle drives another $200,000 annually (on top of room revenue and on top of wine tasting ? add it as another revenue source) with a 20% cost of sales.


Other expenses are salaries at $250,000 and wages at $250,000 per year plus marketing (10% of total sales) and depreciation ($100,000 per year) and other administrative costs running $75,000 per year.  One year is just the 153 days, so need to do any sort of pro-rating ? just use these numbers provided.


After you create the income statement, answer these questions:


a)    What is ADR

b)    What is the overall cost of sales (all cos combined divided by all sales combined) in terms of a percentage?

c)    What is the gross margin percentage?

d)    If occupancy declined to 80%, what would be the decline in annual room revenues?

e)    What is the operating income percentage?



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