A Bit of Fire and Clarabella Inn Financial Information

A Bit of Fire operates a BBQ style restaurant. Some of its financial information is shown below for its fiscal year ended December 31, 2016.

Cost of Sales $60,000 Depreciation Expense 10,000 Gain on Sale of Equipment 3,000 Interest Expense 500 Insurance Expense 7,000 Salaries Expense 50,000 Sales Revenue 145,000 Supplies Expense 2,000 Utilities Expense 9,000

AP-11A ( 7 ) Below is a table containing financial information for Clarabella Inn for the 2015 and 2016 fiscal year. Use the information in the table to answer the following questions. Note that in 2016, Clarabella Inn entered into an agreement with an online service company that allows travellers to book vacant rooms at Clarabella Inn at a discounted price. Required a) Calculate the Occupancy Rate (Note: Occupancy Rate = Nights booked ÷ Total nights available) b) Calculate the Revenue per Available Room (Note: Revenue per Available Room = Room rental revenue ÷ Total nights available) c) Calculate the Average Daily Rate (Note: Average Daily Rate = Room rental revenue ÷ Nights booked) 2016 2015 Room rental revenue $3,000,000 $2,800,000 Number of rooms available for rent 100 100 Number of nights in the year 365 365 Total nights available (# of rooms x # of nights in the year) 36,500 36,500 Nights booked 25,550 22,995 a) Occupancy Rate b) Revenue per Available Room c) Average Daily Rate d) Comment on the change in Average Daily Rate and give a possible reason for this change.