CVP 001
A restaurant has annual fixed costs of 90.000€ and variable costs of 34% of sale revenue.
What is the breakeven sales revenue?
A resort hotel had last year total annual sales revenue of 1.000.000€ and variable cost
was 350.000€. The fixed costs are 570.000€.
a) What was the operating income last year?
b) What is the breakeven point for next year?
A Hotel has fixed costs of 570.000€, variable costs are 250.000€ for a sales income of
900.000€ and tax rate is 30%.
a) By how much do we have to increase the sales to reach a net income of 30.000€?
b) Keeping the same net income of 30.000€, how much must be the sales to cover an
extra fixed cost of 12.000€
c) Considering the initial information (FC=570.000€, VC=250.000€, Sales=900.000€),
what will be the operating income if we replace 20.000€ fixed cost by an additional 8%
variable cost percentage?
d) With the same quantity of sales and costs levels as at the beginning, what will be the
operating income if we increase the prices by 1,5% to cover the 12.000€ extra fixed
costs?
A resort hotel rooms department has annual sales of 700.000€ and variable costs of
190.000€. The F&B department in the same hotel has annual sales revenue of 250.000€
and variable cost percentage of 32%. The hotel total fixed costs are 230.000€.
a) Calculate the hotel breakeven point, assuming that the ratio of room sales to F&B sales
remain constant at any sales level.
b) The owner wants to increase the restaurant sale’s revenue and invest 1.500€ in
publicity leaflets. What level of F&B sales must be achieved to cover this extra cost?
(Rooms sales remain constant).
c) In the rooms department, the owner wants to increase operating income by 30.000€
increasing room occupancy rate. What is the incremental room sales revenue required to
support this 30.000€ increase to operating income? (Assume no effect on F&B sales).
CVP 002
A restaurant has annual fixed costs of 110.000€ and variable costs of 33% of sale
revenue.
What is the breakeven sales revenue?
A resort hotel had last year total annual sales revenue of 1.200.000€ and variable cost
was 370.000€. The fixed costs are 590.000€.
a) What was the operating income last year?
b) What is the breakeven point for next year?
A Hotel has fixed costs of 560.000€, variable costs are 260.000€ for a sales income of
870.000€ and tax rate is 30%.
a) Calculate the breakeven point, operating income and net income.
b) By how much do we have to increase the sales if we want to increase the net income
by 10.000€?
b) Keeping the same net income as originally, how much must be the sales to cover an
extra salary of 10.000€
d) With the same quantity of sales and costs levels as originally, what will be the
operating income if we increase the prices by 1,5% to cover an extra investment of
60.000€ with a 5 year linear depreciation period?
A restaurant has a café and bar operation. The café provides 65% of total sales revenue
with a 42% variable cost. The bar provides 35% of total sales revenue with a 33%
variable cost. Sales are 560.000€ and fixed costs are 255.000€.
a) What are the contribution margins of the bar and of the café?
b) What is the combined contribution margin of the café and bar?
c) The owner wants operating income to increase by 30.000€. To reach this, he will first
of all increase the prices in the café by 2% and in the bar by 3%. By how much must he
increase the sales to reach the goal?
CVP 003
A restaurant has annual fixed costs of 100.000€ and variable costs of 36% of sale
revenue.
What is the breakeven sales revenue?
A resort hotel had last year total annual sales revenue of 900.000€ and variable cost was
280.000€. The fixed costs are 545.000€.
a) What was the operating income last year?
b) What is the breakeven point for next year?
A Hotel has fixed costs of 545.000€, variable costs are 245.000€ for a sales income of
850.000€ and tax rate is 28%.
a) By how much do we have to increase the sales to reach a net income of 30.000€?
b) Keeping the same net income of 30.000€, how much must be the sales to cover an
extra fixed cost of 14.000€
c) Considering the initial information (FC=545.000€, VC=245.000€, Sales=850.000€),
what will be the operating income if we replace 20.000€ fixed cost by an additional 8%
variable cost percentage?
d) With the same quantity of sales and costs levels as originally, what will be the
operating income if we increase the prices by 1,5% to cover the 14.000€ extra fixed
costs?
A resort hotel rooms department has annual sales of 800.000€ and variable costs of
170.000€. The F&B department in the same hotel has annual sales revenue of 230.000€
and variable cost percentage of 33%. The hotel total fixed costs are 240.000€.
a) Calculate the hotel breakeven point, assuming that the ratio of room sales to F&B sales
remain constant at any sales level.
b) The owner wants to increase the restaurant sale’s revenue and invest 1.800€ in
publicity leaflets. What level of F&B sales must be achieved to cover this extra cost?
(Rooms sales remain constant).
c) In the rooms department, the owner wants to increase operating income by 30.000€
increasing room occupancy rate. What is the incremental room sales revenue required to
support this 30.000€ increase to operating income? (Assume no effect on F&B sales).
CVP 004
Rooms Sales
Rooms VC
Rooms Gross Margin
Rooms FC
Rooms Net Margin
F&B Sales
F&B VC
F&B Gross Margin
F&B FC
F&B Net Margin
Total Net Margins
Common FC
Gross Operating Profit (GOP or OI)
Taxes
Net Operating Profit (NOP or NI)
2.950.000
170.000
2.780.000
400.000
2.380.000
600.000
195.000
405.000
200.000
205.000
2.585.000
1.570.000
1.015.000
324.800
690.200
1º Calculate the Company Break Even Point.
2º By how much do we have to increase the sales (both evolution in Rooms Division and
F&B Department) to reach a Net Income of 800.000€?
3º By how much do we have to increase F&B sales to cover a new F&B Fixed Cost of
50.000€?
4º By how much do we have to increase RD sales to cover a new RD Fixed Cost of
50.000€?
5º What level of F&B sales do we have to reach to increase NI by 50.000€ if want to
reach it increasing only F&B sales?
CVP 005
Rooms Sales
Rooms VC
Rooms Gross Margin
Rooms FC
Rooms Net Margin
F&B Sales
F&B VC
F&B Gross Margin
F&B FC
F&B Net Margin
Total Net Margins
Common FC
Gross Operating Profit (GOP or OI)
Taxes
Net Operating Profit (NOP or NI)
3.100.000
195.000
2.905.000
425.000
2.480.000
580.000
174.000
406.000
260.000
146.000
2.626.000
1.860.000
766.000
245.120
520.880
1º Calculate the Company Break Even Point.
2º By how much do we have to increase the sales (both evolution in Rooms Division and
F&B Department) to reach a Net Income of 800.000€?
3º By how much do we have to increase F&B sales to cover a new F&B Fixed Cost of
50.000€?
CVP 006
I. With the following information, fill in the USALI Income Statement bellow and
answer the two questions:
Your hotel has two departments, Rooms Division and F&B Department. Rooms variable
costs are 212.279€ for a yearly level of sales of 2.653.485€. F&B sales are 584.236€ with
a variable cost percentage of 31%.
Rooms division has specific fixed costs for 358.625€, F&B department has specific fixed
costs for 195.634€. The hotel also has some common fixed costs to both departments
for 1.653.240€.
The tax rate is 35%.
Rooms Div.
Sales
Variable Costs
Gross Margin
Specific Fixed Costs
Net Margin
Common Fixed Costs
GOP / Oi
Taxes
NOP / NI
1. What is the global VC% for the whole hotel?
2. Calculate the Breakeven Point:
F&B Dpt.
Total
II. Here you have the accounting figures for a five-star hotel:
Sales
Variable Costs
Gross Margin
Specific Fixed Costs
Net Margin
Common Fixed Costs
GOP / Oi
Taxes
NOP / NI
Rooms Div.
F&B Dpt.
2.953.650
221.524
2.732.126
468.925
2.263.201
665.234
212.875
452.359
254.320
198.039
Total
3.618.884
434.399
3.184.485
723.245
2.461.240
1.895.316
565.924
215.051
350.873
1. Calculate the VC% for Rooms Division, for F&B department and the global VC%
for the whole hotel:
a. Rooms Division VC%:
b. F&B VC%
c. Global VC%
2. Calculate the Hotel Breakeven Point.
3. The owner wants to increase the restaurant sales revenue and spend 42.000€ in
advertising leaflets. What level of F&B sales must be achieved to cover this extra
fixed cost? (Rooms sales and Operating Income remain constant).
4. In the Rooms Division Department, the owner wants to increase the Net
Operating Income by 50.000€. What are the required incremental room sales to
support this increase in Net Operating Income? (Assume no effect on F&B sales).
5. Calculate the new Breakeven Point and the new Operating Income assuming
jointly the following changes from the original values:
a. Selling prices increase by 5% in the F&B Department.
b. Replace 76.000€ fixed costs in Rooms Division by an extra 2% variable cost
percentage.
CVP 007
See below the USALI Income Statement of the Hotel Metropole in Brussels for 2009
(National Bank of Belgium, 2010).
Income Statement 2009
RD
Sales
Variable Cost
DPT. GROSS MARGIN
Specific Salary Cost
Other Specific Fixed Costs
DPT. NET MARGIN
F&B
N-Op. Dpts
Total
8.310.334
3.910.745
12.221.079
-289.069
-955.732
-1.244.801
8.021.265
2.955.013
10.976.278
-1.372.757
-1.585.584
-965.268
-3.923.609
-412.654
-234.512
-352.982
-1.000.148
6.235.854
1.134.917
-1.318.250
6.052.521
Undistributed Goods & Services
-2.256.084
Undistributed Salary Cost
-602.892
Other Operating Costs
-889.853
EBITDA
Depreciation
2.303.692
-1.654.904
Financial Result
-30.367
GOP
618.421
Revenue Tax
-235.000
Net Income
383.421
Dividends
132.759
Retained Earnings
250.662
I.
What is the current BEP of the Hotel Metropole?
II.
The owner of the Hotel Metropole plans to open an additional restaurant to
reach more market shares. This restaurant will be based on the concept of
“Nouvelle Cuisine Française”. It will be located at the back of the hotel and it will
share the kitchen with the main restaurant, “L’Alban Chambon”. We forecast
figures as following:
Same VC% as other F&B operations in the hotel.
Yearly salary cost for service: 320.500€
Additional salary in Kitchen: 78.000€
Rent: 52.000€
Other Fixed Costs: 68.500€
Fixed Assets are 280.000€ depreciated in 7 years without residual value.
1. How much must the yearly sales of this restaurant be in order to not affect the global
profit?
2. Regarding the sales level you calculated in question 1, how much must the sales in the
new restaurant rise to increase the Net Income of the Hotel Metropole by 50.000€?
3. Present a new Income Statement following the USALI standards and taking into
consideration that:
- You started the new activity as forecasted.
- You reached the sales level asked in question 2 for the new restaurant.
- The increase in guest quantity coming from your new F&B activity has given you
a 1,5% increase in Rooms Division sales.
- Due to the increase of sales in Rooms Division, you had to contract additional
housekeeping staff for a yearly salary cost of 75.000€
Forecasted Income Statement
RD
F&B
N-Op. Dpts
Total
Sales
Variable Cost
DPT. GROSS MARGIN
Specific Salary Cost
Other Specific Fixed Costs
DPT. NET MARGIN
Undistributed Goods & Services
Undistributed Salary Cost
Other Operating Costs
EBITDA
Depreciation
Financial Result
GOP
Revenue Tax
Net Income
Dividends
Retained Earnings
4. What will the BEP for the Hotel Metropole be after starting this new activity as in
question 3?
5. Comment on the results you have found in the previous calculations, advising the
owner of the Hotel Metropole on the advantages and disadvantages of opening the new
restaurant. Give your opinion about the operation.
CVP 008
See below the USALI Income Statement for a five-star Hotel during 2010.
Income Statement 2010
RD
Sales
Variable Cost
F&B
N-Op. Dpts
7.652.348 1.856.342
9.508.690
584.748
959.713
DPT. GROSS MARGIN
7.277.383 1.271.594
8.548.977
Specific Salary Cost
1.562.384
569.348
435.962
2.567.694
295.631
718.634
352.982
1.367.247
5.419.368
-16.388
-788.944
4.614.036
Other Specific Fixed Costs
DPT. NET MARGIN
374.965
Total
Undistributed Goods & Services
1.562.348
Undistributed Salary Cost
428.364
Other Operating Costs
512.964
EBITDA
2.110.360
Depreciation
1.756.324
Financial Result
0
GOP
354.036
Revenue Tax
130.993
Net Income
223.043
Dividends
132.759
Retained Earnings
90.284
1. What is the current BEP of this Hotel?
2. How much must the yearly sales of the F&B department be in order to generate
a positive Net Margin?
3. Regarding the sales levels you had originally, by how much should the sales in
Rooms Division increase to increment the Net Income of the hotel by 100.000€?
4. With the following information, fill in the Income Statement here below and find
the missing values. To find out the missing values, you will have to go from the
bottom (Net Income) to the top (Sales).
a. Owners Investment:
2.000.000€
b. Net Income return on Investment:
15%
c. Bank loan:
1.800.000€
d. Interests on the bank loan:
10%
e. Tax rate:
30%
f. Undistributed Operating Expenses:
1.200.000€
g. Rooms Division Specific Fixed Costs:
200.000€
h. F&B specific Fixed Costs:
450.000€
i. F&B Net Margin:
200.000€
j. F&B VC%:
35%
k. Rooms Division VC:
452.143
Forecasted Income Statement
RD
F&B
Total
Sales
Variable Cost
DPT. GROSS MARGIN
Specific Fixed Costs
DPT. NET MARGIN
Undistributed Operating Expenses
Financial Cost
GOP
Revenue Tax
Net Income
Dividends
Retained Earnings
5. Determine the Average Room Rate (figures coming from question 4) assuming a
70% occupancy percentage over a total of 200 rooms.
CVP 009
See below the Financial Statements of the Hotel Le Palace in Brussels for 2009 and 2008
(Based on “National Bank of Belgium, Le Nouveau Palace S.A., 2010” Some figures have
been changed for the purpose of the Test). Use this information to answer questions 1
to 6.
Income Statement 2009
Sales
Variable Cost
Gross Margin
Specific Goods & Services
Specific Salary Cost
Net Margin
Common Goods & Services
Common Salary Cost
Other Operating Costs
EBITDA
Depreciation
Financial Result
GOP
Outstanding Result
Gross Profit
Revenue Tax
Net Income
Dividends
Retained Earnings
Income Statement 2008
F&B
2 798 958
811 698
1 987 260
1 250 362
1 321 725
-584 827
Rooms
12 750 810
578 076
12 172 734
1 658 963
1 548 629
8 965 142
Total
15 549 768 Sales
1 389 774 Variable Cost
14 159 994 Gross Margin
2 909 325 Specific Goods & Services
2 870 354 Specific Salary Cost
8 380 315 Net Margin
2 113 404 Goods & Services
1 754 821 Salary Cost
559 065 Other Operating Costs
3 953 025 EBITDA
2 347 760 Depreciation
0 Financial Result
1 605 265 GOP
0 Outstanding Result
1 605 265 Gross Profit
616 122 Revenue Tax
989 143 Net Income
500 000 Dividends
489 143 Retained Earnings
F&B
2 764 659
912 337
1 852 322
1 245 658
1 310 655
-703 991
Rooms
13 797 810
475 282
13 322 528
1 645 268
1 539 524
10 137 736
1. What is the current BEP of the Hotel Le Palace (figures from 2009)?
2. Considering the 2009 figures, what should the sales in the F&B Department be
in order to reach a positive Net Margin?
Total
16 562 469
1 387 619
15 174 850
2 890 926
2 850 179
9 433 745
2 577 169
2 109 367
759 962
3 987 247
2 532 440
0
1 454 807
59 929
1 514 736
538 279
976 457
500 000
476 457
3. Considering the original board from 2009, how much should the sales in Rooms
Division be to increase the Net Income of the Hotel Le Palace by 150.000€?
4. Determine the Average Room Rate and the RevPAR (figures coming from
original board 2009) assuming a 70% occupancy percentage over a total of 354
rooms (the hotel is open the whole year).
5. Considering the original board from 2008, what should the sales in the F&B
Department be in order to reach a 50.000€ Net Margin?
6. Considering the original board from 2008, how much should the sales in Rooms
Division be in order to increase the Net Income of the Hotel Le Palace by
150.000€? Explain how you manage the Outstanding Result and what is the
difference you make between GOP and Gross Profit?